These Two Industry Heavyweights Are Teaming Up to Fill a Big Void

Westjet Airlines Ltd. (TSX:WJA) and Royal Bank of Canada (TSX:RY)(NYSE:RY) are teaming up to launch Ampli, a new loyalty program.

| More on:
post-its with the focus on one saying "Make Things Happen"

Its no secret: Aeroplan customers are unhappy.

The demise of Aimia Inc.’s (TSX:AIM) flagship program has been a slow burn. First announced more than a year ago, Air Canada (TSX:AC) is dropping Aeroplan in favour of creating its own loyalty program.

Although Air Canada is committed to Aeroplan until June 2020, customers are left wondering what their points will be worth come deadline day. Likewise, its demise has left a void. There is no premier air travel loyalty program in the Canadian marketplace.

Enter Westjet Airlines Ltd. (TSX:WJA) and Royal Bank of Canada (TSX:RY)(NYSE:RY).

Ampli loyalty platform

Last week, the two industry heavyweights announced Ampli, a new travel loyalty platform..

The loyalty platform takes aim at one of Aeroplan’s greatest frustrations — the inability to book flights. Too many blackouts, too little flights available.

Not Ampli. It doesn’t intend to make the same mistakes.

Westjet was quick to point out that Ampli will not have blackouts when loyalty points can’t be redeemed. It also took aim at Air Canada directly, emphasizing that the company does not overbook flights.

Flights are what matter

About 90% of Canadian belong to loyalty programs. Prior to the Air Canada announcement, Aeroplan had approximately five million members. Although Aeroplan miles could be redeemed for merchandise and gift cards, the flights were the most important draw.

Approximately 75% of Aeroplan redemptions are Air Canada flights. The peripherals may be nice, but customers are interested in flights more than anything.

Void presents an opportunity

Air Canada has yet to release any details on its new loyalty program. As such, there is no true flight rewards program available. Westjet and RBC took notice and are acting quickly. Its new program is expected to launch by end of year, a desirable first-to-market position.

If Ampli succeeds where Aeroplan failed, they have a good chance to seize significant market share in Canada’s loyalty landscape. Customers are littered with loyalty programs, but none can fill the void left by Aeroplan.

Ampli has a real chance to stand out.

Outside of Westjet, Royal Bank has made a smart move here. Two of its main competitors, Toronto-Dominion Bank and Canadian Imperial Bank of Commerce are stuck with Aeroplan through 2024.

Not an enviable position; it’s tough to market a declining brand. I sense future write-downs.

Upon the launch of Ampli, RBC’s credit card offerings attached to the new program will instantly become more attractive. Customers looking for a fresh start will no doubt turn to RBC’s Ampli-branded cards, especially if they come with juicy sign-up rewards.

Canada’s loyalty landscape is in the midst of change. RBC and Westjet just upped the ante.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Mat Litalien is long Toronto-Dominion Bank.  

More on Dividend Stocks

Various Canadian dollars in gray pants pocket
Dividend Stocks

Need Passive Income? Turn $5,000 Into $23.85 Every Month

If you're looking for passive income that comes in like a paycheque, this dividend stock provides that to you along…

Read more »

Silver coins fall into a piggy bank.
Dividend Stocks

A TFSA Contribution Room of $88,000 and 1 Dividend Aristocrat Can Make You $172,330 Richer

A high-yield Dividend Aristocrat in the energy sector is a suitable holding for Canadians with $88,000 available contribution rooms in…

Read more »

Dollar symbol and Canadian flag on keyboard
Dividend Stocks

2 Dividend Stocks to Buy Now Under $50

Here are two of the best under-$50 dividend stocks you can buy in Canada right now.

Read more »

Dividend Stocks

If I Could Only Buy 1 Stock Before 2023, This Would be it!

If you could buy 1 stock before 2023, what would it be? Here’s the stock I’m considering, and I think…

Read more »

Beautiful holiday decorated background with christmas gift boxes ,fir. christmas holiday concept
Dividend Stocks

3 Dividend Stocks to Help Offset Holiday Spending

The holidays are here, and so is the seasonal spending. Offset some of those costs by putting your investment cash…

Read more »

edit Businessman using calculator next to laptop
Dividend Stocks

The 3 Passive-Income Stocks I’m Buying Next and Never Selling

These passive-income stocks have a proven track record of growth and a solid sector that will guarantee income for decades.

Read more »

oil and gas pipeline
Dividend Stocks

Enbridge Stock Rose More Than 4.5% in November: Is it a Buy Today?

Enbridge is having a good year. Are more gains on the way for the stock?

Read more »

worry concern
Dividend Stocks

3 Budget Mistakes Almost Everyone Makes

Leave these budget mistakes in 2022 and enter 2023 with more cash on hand and a better way of spending.

Read more »