The price of loyalty

As it horns in on Porter’s home turf, Air Canada hopes Aeroplan’s benefits will trump its rival’s superior brand cachet.

All things being equal, people want free stuff. For Canada’s airline industry, that means if pricing, scheduling and quality of service are generally on par, consumers make choices based on rewards and loyalty programs. On May 1, Air Canada began its new service out of Billy Bishop Toronto City Centre Airport on the Toronto Islands, leading many to posit that the airline’s size and the scope of its Aeroplan rewards program would give it a huge advantage over the airport’s previously sole tenant, Porter Airlines.

The new competition for downtown travellers highlights the increasingly important role of loyalty programs. While Air Canada may not be as beloved among its customers as the smaller airline, it does have Aeroplan, and the prospect of earning—and redeeming—points from Billy Bishop flights might just be enough to sway even the most loyal Porter fan. According to loyalty marketing-research and consulting firm Colloquy, Canadians prefer a wide variety of ways to earn and redeem points. “That’s a big thing Aeroplan has over Porter,” said Colloquy partner Kelly Hlavinka. “The other aspect working against Porter is not having a strategic alliance with other airlines that Aeroplan does. When you can fly from Toronto to New York on United, then to Philadelphia on USAir and still earn Aeroplan points, maybe that consumer will bypass Porter to get enough points for that free trip to Hawaii.”

Porter’s loyalty program, called VIPorter, is a straightforward program for earning and redeeming points for flights. Given Aeroplan’s 25-year history, wide variety of airlines, and earning and redeeming options, comparing it to VIPorter isn’t apples to apples, it’s more like apples to grocery stores. Air Canada is also offering with its new island service many of the same freebies—like free snacks, beer and wine— that made Porter famous, as well as the chance for members to earn 25,000 bonus miles until July 31. “Porter is a great brand, and they have a very strong presence at the island airport,” said Air Canada vice-president of marketing Craig Landry. “But our program serves more than 32 million customers every year so it has a very diverse market. For the island service, Aeroplan is a broader loyalty program that customers can earn and participate in.”

Bob Macdonald, president of marketing consultancy Maritz Canada, says that while Aeroplan is too much for Porter to compete with head on, there are opportunities to be exploited. “If Porter can leverage the notion of its customer experience as so much easier and pleasant, then that’s a counterpoint to their traditional loyalty program that doesn’t have a lot of leverage in the marketplace,” said Macdonald. “Playing to their strength of the customer experience to create greater loyalty will be key.”

That’s just what Porter president and CEO Robert Deluce is counting on. While he said the company has no plans to expand or alter VIPorter, he’s confident Porter can prevail once consumers compare the companies’ travel experience. “Air Canada has a strong reach, and they could be highly successful in bringing people to the airport that have never been there before,” said Deluce. “Once they get [there], it’s up to us to see if we can convert those passengers into Porter fans, and that’s what we intend to do.”

For those who spend half their lives in airports, research shows earned status, such as priority boarding and express security, is treasured more than mere miles. Aeroplan is well-versed in the status game, so Porter’s challenge will be to make sure its non-exclusive “business class for everyone” approach measures up to what can be earned next door.