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Aeroplan, LoyaltyOne & Who? American Express!

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Aeroplan, LoyaltyOne & Who? American Express!
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I don’t normally post on current news releases. There are other sites with more resources to gather and report on current day happenings and I try to stick to broader trends or specific program reviews. The news today, however, calls for an exception.

American Express announced the acquisition of Loyalty Partner today and the coalition landscape just changed dramatically. The EU based company, which owns and operates Payback in Germany and another coalition in India, is one of the crown jewels among established coalition loyalty programs worldwide.

The surprise in today’s announcement is that suddenly what most of us assumed was a two horse race for global loyalty leadership between Aeroplan and LoyaltyOne, just became a three-way fight.

Just about one year ago, LoyaltyOne acquired a 29% interest in Dotz, the leading coalition program in populous Brazil. With just 200,000 members in a country of 190 Million, the growth potential for Dotz is formidable. As the press release stated, “LoyaltyOne’s investment in Dotz marks the beginning of its global expansion strategy that will take the company beyond North America.”

As LoyaltyOne was busy in Brazil, Aeroplan announced its acquisition of Carlson Marketing and launched a new program in Italy. But that wasn’t all…Aeroplan also made a strategic investment in Club Premier, the newly spun-off frequent flyer program associated with Aeromexico. With 2.5 Million members, Aeroplan was justifiably excited about the alliance.

Rupert Duchesne, President and CEO, Groupe was quoted in the press release saying “This is our first investment in an international frequent flyer program. As a result, this transaction represents a strategic breakthrough for our company, marking the export of Aeroplan Canada’s successful business model.”

Accepted thinking in the marketplace was that LoyaltyOne and Aeroplan would resemble two heavyweight prize fighters as their international ambitions developed. These two organizations are the recognized specialists in multi-partner loyalty and no other party had credibility to match.

So what’s a payment card organization doing in this game?

The motivation behind Amex’s interest in the coalition business is probably different than that of Aeroplan and LoyatlyOne. As the press release reads, “The acquisition will deepen American Express’ merchant relationships in select international markets, add more than 34 million consumers to the company’s international customer base and expand its range of rewards and loyalty marketing services.”

34 Million…Pause on that number.

What a great way to assemble a massive base of potential cardholders and to quickly expand the penetration of merchant acceptance in markets where Payback (and other coalitions) exist.

Today’s news tells me (at least) three things:

1. For all the flaws that are cited about loyalty programs, the business model remains one of the most powerful in the market and can yield benefits on multiple levels to any participating business.

2. The business of loyalty itself, is quite profitable and offers high growth potential worldwide.

3. Everyone at Aeroplan and LoyaltyOne will be out buying new racing flats this weekend, because the race pace for “world domination” just picked up!


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