WA707atMSP
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NW Cargo May Downsize, NW May Sell WorldPerks

Tue Dec 04, 2007 9:03 pm

The Minneapolis Star Tribune is reporting today that:

A: NW Cargo may downsize its fleet of 747Fs, because they will be losing DHL as a customer late next year. DHL is NW Cargo's biggest customer

B: NW is considering spinning off its World Perks program

Link to article:

http://www.startribune.com/535/story/1591377.html
 
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TVNWZ
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RE: NW Cargo May Downsize, NW May Sell WorldPerks

Tue Dec 04, 2007 9:06 pm

Airlines have to say they are looking into spinning their FF programs. that is what the Hedge Funds want to hear to drive up the stock. Let's see which airline will be the first to do so in the USA. I don't think it will happen.
 
KarlB737
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RE: NW Cargo May Downsize, NW May Sell WorldPerks

Tue Dec 04, 2007 9:21 pm



Quoting WA707atMSP (Thread starter):
The Minneapolis Star Tribune is reporting today that:

A: NW Cargo may downsize its fleet of 747Fs, because they will be losing DHL as a customer late next year. DHL is NW Cargo's biggest customer

B: NW is considering spinning off its World Perks program

C: Speculation about airline mergers has been strong. Davis said Northwest is "very actively looking at" who the right partner would be if mergers were to happen.
 
AmtrakGuy
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RE: NW Cargo May Downsize, NW May Sell WorldPerks

Tue Dec 04, 2007 9:43 pm

Quoting KarlB737 (Reply 2):
C: Speculation about airline mergers has been strong. Davis said Northwest is "very actively looking at" who the right partner would be if mergers were to happen.

Spirit Airlines. But don't know if government will like it because both NWA and Spirit have hub at DTW.

Because this would help NWA get their foot in Caribbean and South America. And Bahamas too.

[Edited 2007-12-04 13:44:47]
 
lobster
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RE: NW Cargo May Downsize, NW May Sell WorldPerks

Tue Dec 04, 2007 10:34 pm

I find it hard to believe that NW isn't turning customers away in the cargo business especially with all the Asian traffic they have. Something stinks of poor marketing/pricing on their part.

And how exactly would NW "sell" WorldPerks?
 
COSPN
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RE: NW Cargo May Downsize, NW May Sell WorldPerks

Tue Dec 04, 2007 10:42 pm

747-200F's must cost a fortune with todays fuel prices and cargo is 99% EX ASIA not much value cargo going US- Asia
 
PSU.DTW.SCE
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RE: NW Cargo May Downsize, NW May Sell WorldPerks

Tue Dec 04, 2007 10:45 pm



Quoting AmtrakGuy (Reply 3):
Spirit Airlines. But don't know if government will like it because both NWA and Spirit have hub at DTW.

Because this would help NWA get their foot in Caribbean and South America. And Bahamas too.

Not going to happen, period. Spirit is a privately held company and is under no pressure from the financial community to merge with anyone. Calling NK's operation at DTW a hub these days is kind of an overstatement - more like a focus city.

Quoting Lobster (Reply 4):
I find it hard to believe that NW isn't turning customers away in the cargo business especially with all the Asian traffic they have. Something stinks of poor marketing/pricing on their part.

Its not just NW who is seeing a softness in the Asian cargo market, they just have more exposure with their all-cargo ops.

Quoting TVNWZ (Reply 1):
Airlines have to say they are looking into spinning their FF programs. that is what the Hedge Funds want to hear to drive up the stock. Let's see which airline will be the first to do so in the USA. I don't think it will happen.

Agreed. Everything is saying it because its what the financial markets want to hear.

Again, be careful about how things are said and worded at analyst presentations. Companies have to be over-conservative regarding their remarks to the financial markets regarding forward-looking statements. They also have to say they are considering all of their options as well as being slightly non-commital until the time is appropriate to take action.
 
777STL
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RE: NW Cargo May Downsize, NW May Sell WorldPerks

Tue Dec 04, 2007 10:46 pm



Quoting AmtrakGuy (Reply 3):
Spirit Airlines. But don't know if government will like it because both NWA and Spirit have hub at DTW.

Because this would help NWA get their foot in Caribbean and South America. And Bahamas too.

I have a feeling NWA is going to be on the losing end of a merger.
PHX based
 
azjubilee
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RE: NW Cargo May Downsize, NW May Sell WorldPerks

Tue Dec 04, 2007 10:54 pm

The bigger and more important question is WHY is NWA losing the DHL business?


AZJ
 
jfk787nyc
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RE: NW Cargo May Downsize, NW May Sell WorldPerks

Tue Dec 04, 2007 10:58 pm



Quoting COSPN (Reply 5):
747-200F's must cost a fortune with todays fuel prices and cargo is 99% EX ASIA not much value cargo going US- Asia

You are 100% incorrect. There is a ton of traffic traveling from both ends. The difference is from the side of the United States you have heavy things like machinery, metals, high quality very heavy goods.

From Asia's end you have very light garbage and electronics stuff coming from China. Cargo is totally going both ways, You seem to forgot that the little stuff the United States does produce is very very high quality goods. Plus, I would not be surprised NWA is bringing a ton of cargo from that region to Amsterdam and than further down with KLM.
 
NWAESC
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RE: NW Cargo May Downsize, NW May Sell WorldPerks

Tue Dec 04, 2007 11:14 pm

Looks like we're pulling one freighter to start...(this may have been mentioned in the article, but the link wasn't working for me).

From the NWA employee website:


"NWA Cargo has announced, due to fuel costs at $95+/barrel and the low season for cargo shipments approaching, it will temporarily trim its freighter network by reducing one scheduled aircraft, effective January 1, 2008.

This network change will result in the cancellation of freighter service from Narita to and from Singapore and Bangkok, and Anchorage to Osaka will now route Anchorage to Narita. NWA Cargo will continue to offer service to Singapore and Bangkok via Northwest passenger flights. Additionally, freighter operations will still serve the eastbound Osaka market.

These schedule changes will allow NWA Cargo to focus on its core Asia-U.S. freighter network while analyzing future alternatives for new freighter markets/routes once business conditions improve."
"Nothing ever happens here, " I said. "I just wait."
 
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LAXintl
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RE: NW Cargo May Downsize, NW May Sell WorldPerks

Tue Dec 04, 2007 11:22 pm



Quoting Azjubilee (Reply 8):
The bigger and more important question is WHY is NWA losing the DHL business?

DHL now owns 49% of Polar.
From the desert to the sea, to all of Southern California
 
nwafflyer
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RE: NW Cargo May Downsize, NW May Sell WorldPerks

Tue Dec 04, 2007 11:26 pm

Is it the end of the world if NWA sells off world perks? I would think, those of use with a substantial number of miles would lose nothing. Now, if I had it to do again, I would have chosen Delta instead of NW. They have a much better program for those with over 1 million miles
 
bennett123
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RE: NW Cargo May Downsize, NW May Sell WorldPerks

Tue Dec 04, 2007 11:42 pm

JFK787NYC

I did not know that garbage was airfreighted long haul.  Wink
 
deltal1011man
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RE: NW Cargo May Downsize, NW May Sell WorldPerks

Tue Dec 04, 2007 11:47 pm



Quoting 777STL (Reply 7):
I have a feeling NWA is going to be on the losing end of a merger.

yea it will soon be called Delta Cargo
New airliners.net web site sucks....
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TVNWZ
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RE: NW Cargo May Downsize, NW May Sell WorldPerks

Tue Dec 04, 2007 11:54 pm



Quoting Nwafflyer (Reply 12):
Is it the end of the world if NWA sells off world perks? I would think, those of use with a substantial number of miles would lose nothing. Now, if I had it to do again, I would have chosen Delta instead of NW. They have a much better program for those with over 1 million miles

And Delta would tell you they are "considering" spinning off their FF program as well.
 
burnsie28
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RE: NW Cargo May Downsize, NW May Sell WorldPerks

Wed Dec 05, 2007 1:28 am

1. They are downsizing the Cargo ops for now due to the contract with DHL ending at the end of next year.

2. Selling worldperks, doubtful, like AA, it would hurt the airline more, because Air Canada's plan is a disaster for customers, who you have to pay for the right to earn mileage, on fares that are outrageous.
 
johnclipper
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RE: NW Cargo May Downsize, NW May Sell WorldPerks

Wed Dec 05, 2007 1:36 am

My understanding is that almost since inception of the NW/DHL contract, the NW service has sucked. Unreliable aircraft ops into the DHL hub in CVG, then into ILN. Air freight x/US to Asia is always cheap, it's x/Asia to the U.S. where the airlines make money, regardless of the fuel cost (hence fuel surcharges).
"Flown every aircraft since the Wright Flyer" (guys, if you take this literally, then you need to get a life...)
 
azjubilee
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RE: NW Cargo May Downsize, NW May Sell WorldPerks

Wed Dec 05, 2007 2:29 am

How do you know about the reliability of the freighter operation? Is it published somehwere or are you involved with NWA Cargo and the DHL operation?


AZJ
 
Lexy
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RE: NW Cargo May Downsize, NW May Sell WorldPerks

Wed Dec 05, 2007 2:53 am



Quoting JohnClipper (Reply 17):
Unreliable aircraft ops into the DHL hub in CVG,

They don't use the CVG hub anymore. All the equipment inside is gone.
Nashville, Tennessee KBNA
 
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tb727
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RE: NW Cargo May Downsize, NW May Sell WorldPerks

Wed Dec 05, 2007 4:16 am



Quoting Azjubilee (Reply 18):
How do you know about the reliability of the freighter operation?

Anyone happen to know what kind of time and cycles the NW 742F fleet happens to have on it? I know they have some early ones from about 1974ish without looking it up. Just wondering if I will be seeing any fly into OSC anytime soon. I would imagine they will want too much money for them anyways. The 742 is a great airplane, as long as you cover the fuel cost of course, you are good to go.
Too lazy to work, too scared to steal!
 
NwAflyer07
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RE: NW Cargo May Downsize, NW May Sell WorldPerks

Wed Dec 05, 2007 4:35 am



Quoting AmtrakGuy (Reply 3):
Spirit Airlines. But don't know if government will like it because both NWA and Spirit have hub at DTW.

Because this would help NWA get their foot in Caribbean and South America. And Bahamas too.

Better chance of NW buying out Emirates and merging with Lufthansa than that happening. Two completely different work environments, cost structures, and cultures. Read the latest ATW magazine article about Spirit and how they nickel and dime every single penny and you'll start to understand the huge problems with a buyout. (ex. Spirit's main headquarters has a sign that says "This self-service reception area allows the company to save 2 cents per customer by not staffing the front desk.")
 
Sean-SAN-
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RE: NW Cargo May Downsize, NW May Sell WorldPerks

Wed Dec 05, 2007 5:47 am

DHL also utilizes Air Hong Kong for many of these cities, and they are conceivably cheaper and more reliable considering they operate from Asia and have relatively new planes. If they can get lift (Polar or CX perhaps?) to HKG, they might not need NW so much.
 
COSPN
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RE: NW Cargo May Downsize, NW May Sell WorldPerks

Wed Dec 05, 2007 7:09 am

JFK 787NYC,

Of course they are not flying empty but the rate EX USA is very very low ..I am sure cant even cover the cost of fuel ...I doubt many huge tractors and earth moving equipment is send via air...RO RO car ships are loading up with hay just to fill up... One reason the USD is going down...Imbalance of trade..
 
johnclipper
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RE: NW Cargo May Downsize, NW May Sell WorldPerks

Wed Dec 05, 2007 7:18 am

I used to work at the CVG airport before NW switched the DHL plane from CVG to ILN. Many a time, the plane was at the gate when it should have not been. That kind of reliability is not good in an express/courier operation. Freight doesn't matter, but express/courier service needs reliability.
"Flown every aircraft since the Wright Flyer" (guys, if you take this literally, then you need to get a life...)
 
scouseflyer
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RE: NW Cargo May Downsize, NW May Sell WorldPerks

Wed Dec 05, 2007 7:36 am



Quoting Lobster (Reply 4):
And how exactly would NW "sell" WorldPerks?

I'd imagine that they'd sell the customer list and rights to run the programme to a third party in a similar to the way that Nectar (http://www.nectar.com/NectarHome.nectar) run loyalty schemes for Sainsburys, Debenhams, BP etc in the UK
 
Alias1024
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RE: NW Cargo May Downsize, NW May Sell WorldPerks

Wed Dec 05, 2007 8:22 am



Quoting Lobster (Reply 4):
And how exactly would NW "sell" WorldPerks?

My guess would be to spin it off and have an IPO.

I'm not a fan of airlines selling their FF programs, which are extremely valuable assets. The best metaphor I've heard for airlines divesting their FF programs, maintenance operations, etc... is that it is similar to burning your furniture to keep your house warm.
It is a mistake to think you can solve any major problems with just potatoes.
 
jfk787nyc
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RE: NW Cargo May Downsize, NW May Sell WorldPerks

Wed Dec 05, 2007 1:22 pm



Quoting COSPN (Reply 23):
User currently offlineCOSPN From Northern Mariana Islands, joined Oct 2001, 917 posts, RR: 0
Reply 23, posted Wed Dec 5 2007 02:09:35 your local time (6 hours 2 minutes 21 secs ago) and read 143 times:

JFK 787NYC,

Of course they are not flying empty but the rate EX USA is very very low ..I am sure cant even cover the cost of fuel ...I doubt many huge tractors and earth moving equipment is send via air...RO RO car ships are loading up with hay just to fill up... One reason the USD is going down...Imbalance of trade..

You are correct, How much gross weight can be loaded on a 747 Cargo? How many times a week does NWA have an all cargo flight leaving from the United States to ASIA? Seven Times? How many cargo planes do they even have. How would you send a Bentley to ASIA from the United States? If the car is worth $200'000, would you spend $20'000 to ship the car by plane and it will take a week? or would you ship it be container for the cost of $3500 and it will take 60 Days with the possibility of the car getting damaged? Do you not believe that the Japanese or the Chinese are purchasing at least two Bentley's a week to ship to there countries? These cars if bought in a dealership are worth at least $500'000. A Maybach is worth $1 Million Dollars in ASIA, and that is a three year old car. You can get this car used in the United States for $200'000 dollars and than there is 100% import luxury customs. so the car cost $400K in China.
 
max999
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RE: NW Cargo May Downsize, NW May Sell WorldPerks

Wed Dec 05, 2007 5:16 pm



Quoting COSPN (Reply 5):
747-200F's must cost a fortune with todays fuel prices and cargo is 99% EX ASIA not much value cargo going US- Asia



Quoting NWAESC (Reply 10):

"NWA Cargo has announced, due to fuel costs at $95+/barrel and the low season for cargo shipments approaching, it will temporarily trim its freighter network by reducing one scheduled aircraft, effective January 1, 2008.

This network change will result in the cancellation of freighter service from Narita to and from Singapore and Bangkok, and Anchorage to Osaka will now route Anchorage to Narita. NWA Cargo will continue to offer service to Singapore and Bangkok via Northwest passenger flights. Additionally, freighter operations will still serve the eastbound Osaka market.

These schedule changes will allow NWA Cargo to focus on its core Asia-U.S. freighter network while analyzing future alternatives for new freighter markets/routes once business conditions improve."

I think NW's general reluctance to upgrade to newer planes in a timely manner is coming back to haunt them. Many of their cargo competitors (NH, CX, SQ, AF, KL, etc) have upgraded or are in the middle of upgrading to more fuel efficient aircraft. NW does not appear to have any plans to upgrade their freighter fleet.

Although losing the DHL contract was a big hit...It's likely NW Cargo wouldn't be suffering as severely if they were flying aircraft with lower fuel costs.
All the things I really like to do are either immoral, illegal, or fattening.
 
burnsie28
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RE: NW Cargo May Downsize, NW May Sell WorldPerks

Wed Dec 05, 2007 6:17 pm



Quoting JFK787NYC (Reply 27):
How many times a week does NWA have an all cargo flight leaving from the United States to ASIA? Seven Times?

Well if your talking daily, your looking at if you include ANC about 8 daily.

Quoting JFK787NYC (Reply 27):
How many cargo planes do they even have.

13

Quoting JFK787NYC (Reply 27):
If the car is worth $200'000, would you spend $20'000 to ship the car by plane and it will take a week?

Would take about 3 days.

Quoting Max999 (Reply 28):
NW does not appear to have any plans to upgrade their freighter fleet.

Wrong. NW is actively looking into the following the 748F, 777F, and converting their 744's to F.
 
jfk787nyc
Posts: 478
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RE: NW Cargo May Downsize, NW May Sell WorldPerks

Wed Dec 05, 2007 6:38 pm



Quoting Burnsie28 (Reply 29):
Quoting JFK787NYC (Reply 27):
If the car is worth $200'000, would you spend $20'000 to ship the car by plane and it will take a week?

Would take about 3 days.

I was talking about picking the car up from seller, bringing the car to a Shipping Forwarder, Processing all proper paperwork AirWayBill, Invoice's, Packing Lists, Title's, Bringing the car to the NWA Cargo hold in the airport, Loading the car on the plane, Flying the car to Asia, Car going through customs and then last but not least delivering the car from the Asian Shipping Forwarder directly to the purchaser of the car.

Approximately 1 Week-1 1/2 Weeks.
 
jsquared
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RE: NW Cargo May Downsize, NW May Sell WorldPerks

Wed Dec 05, 2007 7:03 pm



Quoting Burnsie28 (Reply 29):
Wrong. NW is actively looking into the following the 748F, 777F, and converting their 744's to F.

They are? I know there were a few threads that mentioned the possibility, but nothing definite. NW 747 Freighter Status (by N501US Oct 17 2007 in Civil Aviation)?threadid=3659245
 
max999
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RE: NW Cargo May Downsize, NW May Sell WorldPerks

Wed Dec 05, 2007 9:01 pm

Quoting Burnsie28 (Reply 29):

Wrong. NW is actively looking into the following the 748F, 777F, and converting their 744's to F.



Quoting JSquared (Reply 31):

They are? I know there were a few threads that mentioned the possibility, but nothing definite.
NW 747 Freighter Status (by N501US Oct 17 2007 in Civil Aviation)

Burnsie, if NW is definitely looking at replacing the fleet then that's insider information I wouldn't know about. For now, there doesn't appear to be any public information about this.

Also, many of NW Cargo's competitors have moved beyond the 'looking' phase. They have already made purchase decisions and are receiving new aircraft deliveries.

[Edited 2007-12-05 13:10:17]
All the things I really like to do are either immoral, illegal, or fattening.
 
burnsie28
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RE: NW Cargo May Downsize, NW May Sell WorldPerks

Wed Dec 05, 2007 9:08 pm



Quoting JSquared (Reply 31):
They are? I know there were a few threads that mentioned the possibility, but nothing definite.



Quoting Max999 (Reply 32):
Burnsie, if NW is definitely looking at replacing the fleet then that's insider information I wouldn't know about. For now, there doesn't appear to be any public information about this.

It was mentioned in an Employee newsletter sometime ago.
 
COSPN
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RE: NW Cargo May Downsize, NW May Sell WorldPerks

Wed Dec 05, 2007 9:53 pm

Sorry JFK787NYC,

I Did not know Bentleys and other such "top end" Cars were made in the USA??? As for Maybach and Bentleys, Wikipedia.org says they are made in the Germany/ UK...Even if USA made such cars 2 747-F's could hold about 25 or 30 each flight so we are still talking about only a few flights.. I Imagine most folks buying these cars are not "riding the bus to work" so can wait a few weeks for Ocean freight... But if one wanted to export 500 Ford Crown Victoria's to Asia they can just drive in one of the many many Roll On Roll Off car ships...offloading cars in Houston, NJ, or Long Beach Ports.
 
Asiaflyer
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RE: NW Cargo May Downsize, NW May Sell WorldPerks

Thu Dec 06, 2007 1:52 am



Quoting JFK787NYC (Reply 9):
From Asia's end you have very light garbage and electronics stuff coming from China. Cargo is totally going both ways, You seem to forgot that the little stuff the United States does produce is very very high quality goods.

So if Asia produces garbage and US produces high quality goods, the consumers appears to have opposite preferences.
US consumers buying garbage and asians buying high quality goods...  Wink
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stasisLAX
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RE: NW Cargo May Downsize, NW May Sell WorldPerks

Fri Dec 07, 2007 3:50 am



Quoting JohnClipper (Reply 24):
used to work at the CVG airport before NW switched the DHL plane from CVG to ILN. Many a time, the plane was at the gate when it should have not been. That kind of reliability is not good in an express/courier operation. Freight doesn't matter, but express/courier service needs reliability.

DHL express and same-day courier services involve strict service level agreements (SLA) that parcel delivery will be completed by a specific time and date, barring any "unforeseen circumstances" such as major weather events or customs bureau delays. When DHL doesn't meet a guarantee SLA, the customer is refunded in full for their shipping costs unless we can reasonably provide proof that an "unforeseen" event has taken place.
"Those who would give up essential liberty to purchase temporary safety deserve neither liberty nor safety!" B.Franklin
 
blueflyer
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RE: NW Cargo May Downsize, NW May Sell WorldPerks

Fri Dec 07, 2007 5:42 pm



Quoting Alias1024 (Reply 26):
The best metaphor I've heard for airlines divesting their FF programs, maintenance operations, etc... is that it is similar to burning your furniture to keep your house warm.

FF is an ancillary activity, maintenance not so much, after all the planes do need to be maintained in order to operate, whereas a FF is technically not required.

A better metaphor would be to rent out a room of your house, with furniture, for a price proportional to the value of the entire house, and hope that the rental market goes up in your neighborhood, so you can raise the rent and start collecting higher revenues. This is basically what happened with the one FF program that was spun off, Air Canada's Aeroplan.

In 2005, Air Canada's parent company, ACE Holdings, spun the program off and sold a 12.5% stake for CAD 250 millions, making the program worth CAD 2 billions. Today, the 87.5% ACE kept is worth well over CAD 3 billions. Some pretty nice furniture, indeed.

This being said, I don't know that ACE's success can easily be duplicated in the US, and US carriers aren't so sure either. After all, if they thought they could be as successful, they most likely would have done it already. I believe the main reason the same success isn't guaranteed South of the border is that Aeroplan doesn't have much competition to speak of when it comes to large-scale loyalty programs in Canada, whereas if (for instance), United were to spin off Mileage Plus, AMR might do the same with AAdvantage, Continental with OnePass, etc... and they will just compete against one another. One might come on top and be the creme de la creme, which means the other ones would become failed programs, or more likely they will all reach some sort of balance where no one will rises to the top and shareholders will not see as big a return as Aeroplan's. All in all, a big payoff is far less likely.
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