Air Canada Merges Frequent-Flier Programs

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Air Canada, flying high following its purchase earlier this year of Canadian Airlines, has merged two frequent-flier programs into one stand-alone unit.

The new Aeroplan division will focus on cementing brand loyalty and generating higher revenues among its more than 5 million members. It will attempt to achieve this by building on existing partner agreements and adding new ones.

The ambitious plan also calls for Aeroplan to jump on the e-commerce bandwagon with the establishment of a virtual shopping center where members will be able to earn Aeroplan miles for purchases of merchandise and other nonair services.

"Aeroplan miles are already a much-valued incentive," said Robert Duchesne, president of the Aeroplan division. He served as chief integration officer during the merger of the two airlines. "We aim at further increasing that value through a significant extension of accumulation and redemption opportunities ... both travel- and non-travel-related."

Aeroplan, the former Air Canada frequent-flier program, and Canadian Plus, the former Canadian Airlines program, both started in 1984. Aeroplan members represent more than 50 percent of the airline's traffic and contribute more than 60 percent of its passenger revenue.

The establishment of Aeroplan as a separate division is part of Air Canada's stated strategy of forming new profit centers within the corporation.

"Our objective is to structure Aeroplan in a more efficient and focused manner," said Calvin Rovinescu, Air Canada's executive vice president, corporate development and strategy.

In the case of Aeroplan, Air Canada is reviewing the merits of giving it a separate corporate identity and spinning it off through an initial public offering. If it goes this route, Air Canada said it would retain majority ownership and control of the new company.

In its pursuit of increased profits at the Aeroplan division, Air Canada also plans to branch off into the customer relationship management services business. The company hopes to sell its CRM expertise, which it honed during its years of partnering with American Airlines, to other companies.

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