Esso shift to PC Op­ti­mum won’t shake con­fi­dence in Aero­plan, Aimia says

Vancouver Sun - - FINANCIAL POST - ROSS MAROW­ITS

MON­TREAL The op­er­a­tor of Aero­plan is push­ing back at sug­ges­tions that Esso’s shift to the PC Op­ti­mum card could shake mem­ber con­fi­dence with the planned de­par­ture of Air Canada as a part­ner loom­ing in 2020.

“We un­der­stand the sen­ti­ment, but our mem­bers have stuck by us over the last year against oth­ers’ pre­dic­tions,” Ch­eryl Kim, Aimia Inc.’s vice-pres­i­dent of cor­po­rate rep­u­ta­tion and pub­lic af­fairs, wrote in an email.

Loblaw Com­pa­nies Ltd. and Im­pe­rial Oil Ltd. an­nounced Tues­day they have signed a deal that will al­low PC Op­ti­mum mem­bers to earn points at more than 1,800 Esso gas sta­tions ef­fec­tive June 1.

Aimia said it is work­ing on a pro­mo­tion to earn more miles with ex­ist­ing part­ners and de­vel­op­ing a strat­egy for how the pro­gram will change once its part­ner­ship with Air Canada ends. That in­cludes mov­ing to a model less re­liant on ex­clu­sive con­tracts and more trav­e­land ex­pe­ri­ence-cen­tric.

Kim said Esso is not a ma­te­rial con­trib­u­tor to Aimia’s fi­nan­cial re­sults and won’t af­fect the com­pany ’s fi­nan­cial guid­ance or strat­egy.

“The num­ber of miles you earn on any par­tic­u­lar trans­ac­tion is pretty low so it’s re­ally not fi­nan­cially a big deal,” she said.

She added that mem­bers con­tinue to be ac­tive as miles earned rose two per cent last year and re­demp­tions ticked only a bit higher.

Aimia said up to 1.5 miles for each dol­lar spent will still be earned us­ing Aero­plan-af­fil­i­ated credit cards at any re­tailer, in­clud­ing Esso.

Drew McReynolds of RBC Do­min­ion Se­cu­ri­ties said that while Esso ac­counts for an undis­closed frac­tion of the 10 to 12 per cent gross billings from non-fi­nan­cial and non-Air Canada part­ners, the min­i­mal fi­nan­cial im­pact doesn’t con­vey the over­all ef­fect on Aero­plan as it pre­pares for the de­par­ture of Air Canada. “The op­tics of any ac­cu­mu­la­tion part­ner de­fec­tions be­tween now and 2020 are neg­a­tive in our view, mak­ing new Aero­plan part­ner an­nounce­ments be­tween now and 2020 that much more crit­i­cal to stem changes in mem­ber be­hav­iour,” he wrote in a re­port.

How­ever, Aero­plan has lost and gained part­ners be­fore, said An­a­lyst Neil Lins­dell of In­dus­trial Al­liance Se­cu­ri­ties, who doubts Esso’s move will have an im­pact on what other part­ners might do. “It’s not like some­body’s just dumped Aero­plan be­cause they don’t want to be as­so­ci­ated with it,” he said. “It’s that they’ve got a bet­ter com­pet­i­tive pro­gram that they want to work with ...”

Align­ing with Loblaw could de­liver a broader de­mo­graphic than the higher-end con­sumers tar­geted by Aero­plan, he said.

Lins­dell said the an­nounce­ment of Aimia’s new strat­egy for Aero­plan, in­clud­ing im­prov­ing its car rental and ho­tel of­fer­ing, will re­as­sure mem­bers and in­vestors.

GRA­HAM HUGHES/THE CANA­DIAN PRESS FILES

Loblaw Com­pa­nies Ltd. and Im­pe­rial Oil Ltd. have signed a deal that will al­low PC Op­ti­mum mem­bers to earn points at more than 1,800 Esso gas sta­tions start­ing June 1.

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