As with most airlines, Air Canada is facing a “drastic restructuring” because of declining revenue according to news from The Canadian Press. An industry analyst, Jacques Kavafian of Research Capital, said that the airline should undo the damage caused by parent company ACE Aviation Holding’s unbundling strategy that removed Air Canada’s flexibility to weather the economic storm. In other words, the airline’s decision to spin off its frequent flyer program, Aeroplan, among other decisions. Kavafian said the airline got “long-term pain for short-term gain” and suggests, among other initiatives, that the airline increase seat density by reducing business class seats (oops, there goes your upgrade) and renegotiating terms with Aeroplan.
Keep in mind that this is one analyst’s opinion, but it’s interesting to note how the spinning off of the program was once seen as a smart business move, but now is being seen, at least by some, as not smart at all.