A new competitor has emerged in the great airline rewards program battle.
Driving the news: Porter Airlines has teamed up with BMO and Mastercard to launch a new suite of credit cards for members of VIPorter, Porter’s loyalty rewards program. The card is expected to take off in the spring and will let holders earn points through purchases.
Why it matters: For Canadian travellers obsessed with points, Porter could soon be a legitimate competitor to Air Canada and WestJet thanks to its expanded routes and its new card… if the card can compare to the Aeroplan Visa Infinite or WestJet World Elite Mastercard.
Big picture: Airlines are now loyalty program providers whose main biz is selling points and miles to banks, and just happen to fly planes. While operating margins for domestic flights are a tight 12%, loyalty programs boast a 30% to 80% margin, with far fewer expenses and staff.
- Aeroplan, Air Canada’s rewards program, was valued at US$6.8 billion in 2023, about $1.9 billion more than the current value of the airline itself — a common theme in the space.
Yes, but: The loyalty rewards model has come under pressure as long-time frequent flyers are disappointed by perceived diminished returns and once-exclusive lounges are crowded. And in the U.S., the top four airlines face a federal probe into their rewards programs.—QH