MONTREAL – Aeroplan aims to get into the airline business by offering charter flights to its most popular destinations as the loyalty program prepares for the end of its exclusive partnership with Air Canada in 2020.
“We have routes where we have enough redemption demand today that we can fly a daily charter throughout the year on some particular routes,” Jeremy Rabe said in his first media interview since taking over in May as CEO of parent company Aimia Inc.
“Those will be dedicated Aeroplan aircraft that are flying just for Aeroplan.”
Aimia is in negotiations with potential airline partners to operate narrowbody aircraft ideally suited for flights to sun destinations in the Caribbean.
Details about the number of planes, their outside look and configuration will be announced in the next year or so, Rabe told The Canadian Press.
The big move shows the loyalty program is committed to providing the greatest value to members, he said.
“We can optimize the itineraries, we can make sure that those planes are flying to the places where people actually want seats and again that’s a big difference than today.”
The Montreal-based company is preparing for July 2020 when its 30-year partnership with Air Canada expires as the airline launches its own loyalty program.
Industry analysts say the company’s long-term prospects are unclear. As of the first quarter it cut $70 million in costs but Stephanie Price of CIBC World Markets estimates the company will need an extra $200 million a year to buy flights at market rates after 2020.
When its exclusive partnership with Air Canada ends, Aeroplan members will be able to buy seats on any airline, any time, to any destination instead of being limited to Canada’s largest airline and its Star Alliance partners.
An Aeroplan survey found that 72 per cent of members said expanding redemptions to any airline would be a “big improvement” to the program.
Aeroplan is working to sign up preferred airline partners and is also introducing several new program features that will create a more flexible program and a better member experience.
Starting in September, Aeroplan will introduce a new online travel booking tool that will initially enable members to earn miles when they rent a car or book a hotel using cash.
Within two years, miles alone or in combination with cash will be redeemable for a variety of travel, leisure and entertainment experiences, including concerts, spas and private jets.
Additional digital tools, backed by the use of artificial intelligence and machine learning, will enhance the experience by anticipating member preferences based on their travel history, Rabe said.
“So we’re going to get creative around things like suggesting maybe some cool destinations where you can think about travelling.”
Aeroplan plans to offer redemptions starting at the same mileage levels for about 95 per cent of its flight redemptions. That answers one of the biggest questions he’s heard from members about how Aeroplan will look after 2020, Rabe said.
It is also introducing a points transfer program in 2020 that will allow members to convert Aeroplan Miles to the loyalty programs of nearly 20 airlines covering several alliances, giving them wider access to flights and hotels.
Rabe downplayed the risk that the transfer program will be a conduit for members to end their loyalty to Aeroplan.
“If members see that we’re going to have an incredible loyalty program, differentiated value, flexibility and experience then I’m confident that members will continue to engage in the program and it will be the best loyalty program in Canada.”
Rabe took over from David Johnston, who resigned on the eve of the company’s annual meeting in April when Rabe was elected to the board as a representative of Mittleman Brothers LLC, which had been critical of Aimia’s performance.
He was founder and a managing partner of On Point Loyalty, a boutique investment and advisory firm focused on the airline loyalty industry.
After just six weeks on the job, the experienced loyalty programs executive said he plans to pursue organizational changes to focus on driving value to members and partners and become a more entrepreneurial organization that is able to respond quicker.
He is also focusing on strengthening the relationships with partners to show the value of working with Aeroplan.
“I think there’s been some great developments in Aeroplan over the years, but when I look at what happened with the Air Canada relationship I’m not sure that we managed that to the best of our ability.”
Companies in this story:(TSX:AIM)