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Aeroplan (TSX aer.un) has created some enormous controversy. They have arbitrarily changed numerous rules forcing customers to redeem their points sooner or face forfeiture. Management claims this is designed to cull out financially inefficient clients. Marketing experts claim substantial damage to the brand has occurred. Almost everyone is tremendously suspicious over what is now a PR fiasco. You could almost hear the lawyers dictating legal documents as they prepare lawsuits.

Management must have expected a huge windfall. It probably looked great on the spread sheets. (It always does) The dilemna becomes this: If there were so many problems were past corporate valuations reasonable accurate. Were management comments truthful and reliable. If management retreats either as a PR move or in the face of legal action can they pretend that everything is OK with the shareholder valuation. Expect executive casualties and external litigation. Aeroplan has also partnered with many other enterprises. Expect turbulence in those relationships.

ACE Aviation (TSX: ACE.A) and Air Canada spun this entity off in June 2005 may be wondering if there will be any negative impact on their proposed IPO.

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