Aimia’s 10-Year Deal with TD Bank, CIBC Clears Up Confusion over Aeroplan Loyalty Program

Canadian-based loyalty program operator Aimia’s recent agreement with TD Bank Group (TD) and Canadian Imperial Bank of Commerce (CIBC) ended months of confusion regarding Aeroplan – the country’s premier coalition loyalty program.

Two weeks ago Aimia confirmed 10-year financial credit card agreements each with TD Bank Group (TD) and Canadian Imperial Bank of Commerce (CIBC), effective Jan. 1, 2014. TD will become Aeroplan's primary financial services partner and credit card issuer, under an amended version of the agreement announced previously, while CIBC will also continue to be an issuer of Aeroplan credit cards.

Aimia also announced entering into a purchase agreement with TD and CIBC, under which TD will acquire about half of the current Aeroplan card portfolio and CIBC will retain the balance, comprised of Aeroplan cardholders who have broader banking relationships with CIBC.

Both banks will offer members an enhanced suite of Aeroplan Visa credit cards to include more earning options and benefits than ever, including exclusive Air Canada benefits, in addition to the ground breaking changes to Aeroplan with Distinction benefits to be launched in January 2014 for all Aeroplan members.

The previous confusion stemmed from Aimia’s original decision to move its Aeroplan reward-partnership exclusively to TD Bank, which is Canada’s second-largest bank. CIBC threatened to take legal action on the grounds it had been denied first right of refusal to the credit card program.

The compromise announced in mid-September makes TD the “primary” credit card issuer for Aeroplan, which means it gets exclusive rights to mass advertising in bus shelters, airports, and media.  CIBC can continue marketing Aeroplan credit cards to its own bank customers, but only within its own branches or network.

Aimia spokesperson JoAnne Hayes told Loyalty 360 that the situation leading to the confusion stemmed from the fact that Aeroplan’s contract with CIBC was up for renewal at the end of 2013.

“The contract renewal process provided an opportunity for Aeroplan to renegotiate the terms of its contract that will allow it to reinvest back into the program to create an even better program for our members,” Hayes said.

Some of the major enhancements that will transform the Aeroplan program in 2014 include:

•  The launch of Distinction, a new tiered recognition program that rewards top accumulating members, based on total miles earned across all coalition partners, with preferential mileage levels for redemption, bonus mile offers and exclusive privileges;

•  New Market Fare Flight Rewards will replace ClassicPlus Flight Rewards, providing exceptional availability and value on Air Canada flights. Mileage levels have been reduced up to 20% for all members and up to an additional 35% for Distinction members.

• The cancellation of the seven-year mileage redemption policy, with miles no longer expiring for members active in the program each year.

“All in all, the outcome arrived at combines two leading Canadian credit card issuers with Canadian’s premium traveling coalition, an attractive financial cards portfolio, and a greatly transformed program which offers unparalleled benefits to members,” Hayes said. “That is what will make Aeroplan distinctive in the market, keep members loyal to Aeroplan, and will grow Aeroplan’s market share.”

CIBC cardholders who are transferred to TD will not lose any points and points earned up to the end of the year can still be redeemed in future, the companies said.

According to published reports, the agreement calls for TD to buy 550,000 cardholders from CIBC, worth $20 billion in retail spending and $3 billion in receivables. What’s more, CIBC will receive $200 million upfront from TD and Aimia, and another $37.5 million a year spread over three years.

Both banks will issue a new suite of Aeroplan credit cards in January, Aimia said. These include premium, enhanced premium, and mid-market cards along with cards for small business owners. TD will exclusively launch a new card for U.S. travelers.

Both banks have also agreed to pay Aimia 15% more per mile, part of an overhaul of the Aeroplan program previously announced in June.

As part of the deal, TD will pay Aimia $100 million upfront to help fund the Aeroplan enhancements and split $140 million in marketing expenses over four years to promote the new program.

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