This Week In Travel

Technically, it’s “these weeks in travel,” since we’re moving this to an every-other-week feature but, as long as I get to call them TWIT (This Week In Travel) notes, I’m okay with the change.

Can The Airlines Borrow Against Their Frequent Flyer Programs?

So we’ve reached the point where the airlines have mortgaged pretty much every tangible asset that they have, so let’s get started with the intangible ones.

Recently, I’ve been reading more and more articles like this one, which report that the airlines are considering using their frequent flyer programs as collateral. That’s a great move for the airlines, considering that the plans might have zero value, anyway.

Sure, we all read about how valuable the loyalty programs are. They sell miles to banks, restaurants and anyone else who will buy them. The organizations then hand them out for loyalty rewards. Everyone’s happy, right? Not so much. These programs only have as much value as the airline involved gives them.

Example: Air Canada’s Aeroplan. At the beginning of the 2000s, Air Canada was in pretty poor financial shape. Aeroplan, the frequent flyer program, was the most valuable asset that the airline had, so Air Canada spun it off to a new company which would eventually be called Aimia (They’re nothing if not creative.). Aimia had an exclusive arrangement with Air Canada through 2020 to run and own the frequent flyer program.

The problem is, Air Canada grew tired of an independent company knowing more about its customers than it did, so it did what any logical company would do: In 2017, it announced that it was dumping Aimia faster than the Ancient Mystic Society of no Homers dumped the Stonecutters and announced that it was forming a new loyalty program, disintermediating Aimia. Aimia’s stock price plummeted, and Air Canada found it simpler just to buy back Aeroplan at a big discount.

The same could happen in the US. What would happen if American mortgaged its frequent flyer program and then simply announced that it was launching a new program, Aadvantage 2.0, which would be totally separate from the old one. They’d honor the old miles, transfer them over and that would be it for Aadvantage 1.0.

Feds, think about it before you make the deal.

More Goings On In Travel
The Week In Travel

Lots of other stuff going on, but I’m getting tired of typing. Here are a few pieces of news worth looking at.

• United is threatening to furlough 36,000 employees if it doesn’t get more assistance. When the airlines originally received their government aid, there were some questions about what they were and weren’t allowed to do before September 30. After that date, though, it appears to be “anything goes.”
• I’ve gotten some questions about what airlines and hotels are doing about their loyalty programs. We’ve tried to assemble all of the information in one place, so check out the airline guide or the hotel guide for the respective extensions.
• I’m also going to make a few changes to the way that we list quarterly hotel promos. In the past, we’ve done a single post for each promotion. Going forward, we’ll have one master list that compiles all of the hotel promotions into one post, so you can easily compare and contrast.
• I don’t know who thought of the idea of the luxury submarine, but how cool is this?

PACK THE CAR:
YOUR NEXT VACATION COULD BE A ROAD TRIP