Air Miles has a story that’s as iconic as it is dramatic. Through its precipitous rise to its ignominious and sad internal collapse, the brand has maintained a recognition amongst Canadians unparalleled by any other loyalty rewards program.
It looks like this story has at least another few chapters yet to be written, because the white knight known as the Bank of Montreal has completed its acquisition of Air Miles as of June 1, 2023.
Let’s dig in.
On June 1, 2023, BMO completed its acquisition of Air Miles. The bank paid $160 million (USD) to bring the loyalty program under its purview, and the deal has now been completed.
To quickly recap what brought the bank to make the purchase, the Air Miles loyalty program had been in decline for quite some time.
First came the news of enormous devaluations in 2021, particularly when using Air Miles for travel.
Then came years of stagnancy and lack of growth as customers organically veered away from using Air Miles, because it was harder to gain a sufficient amount of miles to redeem for decent rewards. Even if they were able to, it became more complicated as Air Miles became split between the Dream and Cash categories, both of which having different rules and valuations around redemptions.
Third came the mass abandonment of the Air Miles program by its various meaningful retail partners in 2022 and beyond, which included Lowe’s, Staples, and the crown jewel of Empire-affiliated grocery stores, such as Sobeys. To add insult to injury, the grocery juggernaut opted to board the Scene+ program instead, which by all accounts has been full steam ahead since then.
This cacophony of woes resulted in Air Miles’s former parent company, Loyalty Ventures Incorporated, declaring bankruptcy back in March of 2023 – after senior executives had a chance to pay themselves hefty bonuses from the meagre remaining balances of the company cash accounts, of course.
BMO offered to immediately buy out the Air Miles portion of Loyalty Venture Incorporated’s portfolio, and with obvious reason. The Air Miles brand name still holds a hallowed cachet to many Canadians, not because of what the brand has been recently, but because of the ubiquity it once possessed.
And now, BMO inked a deal to acquire Air Miles that was pending court approval for the past few months. On June 1, 2023, the deal was finally completed, with BMO noting its excitement for the future and plans to reinvigorate the program.
After years of turbulence, the goodwill that Air Miles has lost with customers will be hard to win back, whether backed by the Bank of Montreal’s deep pockets or not.
While the program continues to have the prestige and recognizability that comes with the Air Miles name, the brand has been damaged on two major fronts.
The first is its value proposition to the customer: using Cash or Dream Miles has, for many, been a mediocre or even confusing experience at best. When one decides to expend their hard-earned miles, it’s rarely for a redemption of excellent value.
The second issue facing Air Miles is its significantly reduced retailer network. Historically, the program became famous because Air Miles could be collected at almost any brick-and-mortar shop.
However, Air Miles has much starker competition not just from traditional retail competitors such as the PC Optimum program, but from other travel rewards powerhouses like Scene+ and Aeroplan. This means that accumulation is slow, and the footprint of Air Miles has suffered due to mismanagement.
Both of these problems have presented customers an honest question: with so many loyalty programs vying for business, why should anyone continue to use Air Miles? It appears BMO isn’t blind to these issues, and their latest press release notes proactive steps to try and resuscitate the brand.
BMO is promising to revamp the Air Miles travel portals for an easier user experience. However, this promise is coming from a bank that has been notorious for its devaluations of its own BMO Rewards travel program, and whose internal travel portal has been almost entirely replaced by permitting customers to redeem BMO Rewards points at 0.67 cents per point against travel purchases made directly with vendors.
The bank is also vowing to improve the program’s retailer network, and to offer customers chances to earn many more bonus Air Miles as part of promotional events. While the latter is commendable, the former has me raising my eyebrows: after all, Air Miles has added partners recently who fail to inspire much confidence.
The issue is that these new partners tend to be specialist merchants with high prices and limited customer bases, such as the meal delivery box company Goodfood, whose performance on the Toronto Stock Exchange looks similar to that of the dearly departed Loyalty Ventures Incorporated.
On the upside, BMO hasn’t indicated anything about joining the Metaverse in partnership with various obscure and shady-sounding companies.
Regardless, the Bank of Montreal’s latest acquisition has an uphill battle in front of it, and will need innovation and creativity to excite confidence in customers once again. Here’s hoping that the legendary Air Miles name can soar to new heights, but it does seem unlikely based on the promises BMO is making at this time.
BMO has completed its acquisition of Air Miles from the defunct Loyalty Ventures Incorporated. This is an enormous purchase of a famous loyalty brand for the Bank of Montreal, and came with a price tag of $160 million (USD).
This development comes at a time of change in the loyalty space, with many new competitors for the aging Air Miles to face in the form of Scene+, Aeroplan, and PC Optimum, just to name a few. Time will tell if BMO is up to the task, but first the bank will need to successfully rebuild the faith of customers in a program that has had a poor reputation for some time.
Until next time, keep your eye on Air Miles.