Air Canada and Aeroplan are separate companies, and in 2020 Air Canada is going to go its separate way. Aeroplan is losing its airline.

Copyright: ronniechua / 123RF Stock Photo

oneworld member air berlin is in bankruptcy and received a loan guarantee from the German government to keep operating. Its frequent flyer program topbonus is also a separate company, and if air berlin goes out of business (selling off pieces of the airline, a reasonably likely scenario) it too will lose its airline.

The topbonus program isn’t in bankruptcy. But it has announced a suspension of both mileage accrual and redemption. (HT: Jeff F.)

Etihad was limited by foreign ownership rules how much of air berlin it could own. But both to provide additional cash to the airline, and to exercise additional control, the frequent flyer program was spun off and Etihad took a majority stake. Frequent flyer programs aren’t subject to the same foreign ownership rules as airlines.

With air berlin losing billions of dollars, on top of Etihad vassal state Alitalia which is being auctioned off, the strategy of investing in failing foreign airlines to turn them around and funnel their traffic through Abu Dhabi is failing. Etihad has lost patience with losses. They’ve fired their CEO architect of the strategy.

It’s unclear what the future of the air berlin frequent flyer program is. It’s underperformed financially relative to its $360 million implied valuation when it was spun off in 2012.

• It seems wise not to allow future redemptions beyond October, given uncertainty about the airline.

• It’s unclear whether air berlin is paying for miles at this point. No other oneworld airline has announced an unwillingness to credit miles for air berlin flights, despite that uncertainty.

  As long as air berlin is reporting the flights, this would create a unique situation where you could credit air berlin flying to American AAdvantage but not air berlin topbonus.

• Anyone flying air berlin should provide the airline with a partner frequent flyer number given this announcement. Any readers who do please let me know whether or not those miles credit.

The topbonus program will face challenges without an airline partner. Its few million members represent both a liability (accrued miles) and an asset (the list of names, permission to market, and behavioral data).

It’s unclear what happens to the program, whether it will attempt a pivot along the lines of aeroplan. In June I wrote that the airline was falling apart and so was the frequent flyer program. A team from topbonus reached out to try to convince me otherwise. I didn’t write a retraction.