Aeroplan Reports on Lucrative 2005

Aeroplan Reports on Lucrative 2005

Aeroplan Income Fund will focus its efforts on meeting growth targets and further reducing operating costs in 2006, CEO Rupert Duchesne told David Paddon of The Canadian Press after announcing a $100-million profit for 2005.

The Montreal-based company, which operates loyalty programs for former parent Air Canada, CIBC and American Express credit cards, and a growing number of partners in other industries, ended 2005 on a high note.

Net earnings in the fourth quarter ending Dec. 31 were $29.7 million, up 35.6 per cent from a comparable $21.9 million in the fourth quarter of 2004, which was before the former Air Canada subsidiary’s initial public offering last summer.

Aeroplan said its growth in the year and quarter was driven by higher sales to existing and new commercial partners, positive momentum in the travel industry, consumer adoption of new partner products and growth in consumer spending.

Duchesne stressed that Aeroplan is working on a new “dynamic” pricing project to complement its existing air traveler rewards programs and continuing to add retail partners that use its Aeroplan-branded loyalty system.

In addition, Aeroplan is working with Air Canada on a way to have their call center personnel work from home, in order to reduce the cost of renting space for them to work, he told analysts.

The Canadian Press also reported that Aeroplan is working on a dynamic pricing system that will enable it to buy an unlimited number of airline seats from Air Canada or its partner airlines at a price linked to a prevailing market price.

That system will complement the traditional system, where Aeroplan buys a fixed percentage of airline seating according to a fee-schedule and a newer loyalty program that buys a limited amount of additional capacity at market-linked rates.

Duchesne said Aeroplan’s partners are in favour of finding a way to make more seating capacity available to loyalty-point holders but said it’s a challenge to develop a computing system to make the dynamic pricing concept work.

On the other hand, he boasted to Paddon that Aeroplan is a leader in its industry and the first loyalty company to tie together frequent-flier, credit-card and retailer rewards programs.

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