August 21, 2018 1:17 pm
Updated: August 22, 2018 12:41 am

Air Canada to buy Aeroplan: 8 things consumers should know

WATCH ABOVE: After more than a year of uncertainty for Aeroplan loyalty members, Air Canada has decided to buy back the program it started. Sean O'Shea reports.

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Aeroplan is likely going back to Air Canada. A consortium led by the airline announced a tentative deal on Tuesday to buy back the loyalty program it spun off years ago for $450 million in cash.

The group of buyers, which includes TD Bank, CIBC and Visa Canada Corp., is also taking on around $1.9 billion in unredeemed Aeroplan miles.

WATCH: Air Canada buying back Aeroplan

The current deal represents a sweetened bid after Aimia, the current owner of Aeroplan, rejected an initial offer in July of $250 million in cash plus the assumption of the points liability.

READ MORE: Air Canada consortium to buy Aeroplan from Aimia

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The news is the latest a series of recent headlines about Aeroplan. It was only weeks ago, after all, that the program announced partnerships with Porter Airlines, Flair Airlines and Air Transat that would allow members to earn and redeem Aeroplan miles with the carriers beginning in July 2020, right after the tie-up between Aeroplan and Air Canada was set to end in June.

READ MORE: Use points or keep saving? What Canadians should know about the Aeroplan-Porter deal

So where does this new deal leave Aeroplan members? Here’s what we know and don’t know so far:

Is this a done deal?

Not yet. It’s an agreement in principle that is still subject to shareholder approval and other closing conditions. That said, Aimia’s board and its largest shareholder support the bid. If it moves forward, both Aimia and Air Canada have said they expect the deal to be finalized sometime in the fall of 2018.

WATCH: Aeroplan withdraws survey amid criticism

What if the agreement isn’t approved?

According to the Aeroplan website, it will be “business as usual.”

READ MORE: Esso drops Aeroplan as it picks up Loblaw’s PC Optimum, Esso Extra to continue

Is Air Canada still planning to roll out a new loyalty program of its own?

Yes. Air Canada is still forging ahead with plans to unveil an all-new and as-yet-unnamed new loyalty program in 2020. If the deal goes through, customers’ Aeroplan miles will be transferable to the new Air Canada program when it launches, the airline said on its website.

So do I still need to use up my miles before 2020 if I want to redeem them for Air Canada flights?

Probably not but that isn’t entirely clear. The point of the deal is, among other things, to allow a “smooth transition” to Air Canada’s new loyalty program, Air Canada chief executive Calin Rovinescu said in a statement on behalf of the consortium. But will an Aeroplan mile be worth what it’s worth today after 2020? For now, Air Canada isn’t offering any details about how members will earn and redeem points in its new program.

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Enough about Air Canada, what about earning and using my Aeroplan miles in other ways?

There’s more to Aeroplan than Air Canada. Members can earn miles by flying with Star Alliance airlines as well, for example. And since April, they can even pile on the points by shopping on Amazon.ca. In terms of using your miles, you could rent a car or buy a blender, to name a few options, if flying isn’t your thing.

So what happens to all that?

Until June 2020, again, it’s “business as usual,” according to Air Canada. But details on what might come are scant.

READ MORE: Good news for Aeroplan devotees: Members soon to earn points on Amazon

What does the deal mean for my Aeroplan credit card?

Once more, “business as usual” until June 2020, according to Air Canada. But the airline also noted on its website that “the completed purchase of the Aeroplan Program from Aimia is subject to certain conditions, including Air Canada, TD and CIBC reaching a credit card agreement.”

Remember that since 2014, TD has been Aeroplan’s main Visa card partner although CIBC continues to offer cards that earn Aeroplan points that can be redeemed for Air Canada flights and other rewards.

What is going to happen to the deals with Porter, Flair and Air Transat? 

Here what Aimia told Global News via email: “A deal with the Consortium was contemplated in the context of the recently announced deals with Porter, Flair and Air Transat and they obviously were only expected to come into play in 2020. Pending a definitive agreement with Air Canada and the consortium, it is business as usual and not appropriate to comment further on these.”

Air Canada said it would provide no comment beyond what it said in a prepared statement and what is available on its website.

WATCH: Aeroplan signs partnership with Porter Airlines

Is this a good deal for Aeroplan members?

That’s hard to tell given the lack of details. One thing seems clear, though: competitors are jumping at the chance to lure away Aeroplan members turned off by the uncertainty surrounding the future of their points.

WestJet Airlines, for example, teamed up with RBC to create a new loyalty program that aims to attract a “very substantial” group of “very unhappy” customers from Aeroplan.

And Drop, an app-based loyalty program that counts 2 million – mostly millennial – users across North America, is planning to branch out into flight and travel rewards by the end of the year, CEO Derrick Fung told Global News.

Customers will be able to use most credit or debit cards to earn “flight passes” on several airlines, as well as credit toward hotels or home-sharing services like Airbnb, he added.

Air Canada’s bid is good news for “consumers who’ve been with Aeroplan for quite some time” and who have lots of points to use, said Fung. But Aeroplan, with its limited way to earn points and painfully high thresholds for redemption, is now an antiquated model for loyalty programs, Fung said.

“Ultimately,” he said, “they’re missing the point.”

With files from the Canadian Press

© 2018 Global News, a division of Corus Entertainment Inc.

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