July 3, 2017 View in browser

Air Canada's Coming Loyalty Advantage

Air Canada recently announced they are building a new loyalty program from scratch for their five million active members.

By 2020, the airline will be moving away from their current program, Aeroplan, into a standalone entity. The social media impact from the announcement, however, was largely negative with existing Aeroplan members complaining that points wouldn't be carried over. Over 200 billion miles are active on customer balances, according to The Star. Aeroplan was originally Air Canada's in-house loyalty program, later spun off as an independent business, now called Aimia.

By bringing the entire program in-house, the company suggests that they will be closer to consumers and to deal directly with their frequent fliers.

In addition, the airline plans to work with artificial intelligence platforms "to recognize patterns in customer data and employing augmented reality to change how employees learn and collaborate. Using data analytics on information collected from frequent flyers will help the airline better understand their shopping patterns, improve service and build loyalty."

Expect this to be the first of many migrations in the airline and hotel loyalty space. The companies that are winning trust with the younger millennial consumer class are those that have been built from the ground up to be direct to consumer. Think Warby Parker, Casper, Harry's, etc. They have built their data operations from scratch, and can be much more iterative and nimble, with the result being more customer centricity.

It is interesting here that, instead of trying an expensive retrofit, Air Canada is acknowledging that to have serious progress, they need to start from scratch to make something that consumers actually want. It is shocking how bad airlines are in recognizing their key customers. British Airways employs in-cabin iPads, but the handoff of customer data into empathetic, thoughtful service seems few and far between.

Band-aids won't work any more.
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