This is a continuation of my evaluation on Aeroplan’s changes which I discussed here. I’ve split this analysis into four parts. This is the third post in the series of four:

Part I – Distinction

Part II – Award Chart

Part III – Co-branded Credit Cards (This Part)

Part IV – Various other bits and pieces, including market-fares flight awards

As I discussed in length in this post, CIBC and Aimia were due for renewing their contract this year. It seems that Aimia (Aeroplan) has decided to partner with TD. This is a very smart move for them, as in the press release, they say that they are now able to raise the rates they charge the banks for 1 Aeroplan mile, and if you didn’t know, the way Aimia makes money is by selling miles and profiting when those redemptions cost less than the money that they get paid from Air Canada and other banks.

There are a few juicy tidbits that I thought was worth mentioning:

New Aeroplan co-branded financial credit cards, to be launched in 2014, will provide cardholders with more flexible options, better earn rates and new recognition features; all of which is in addition to the benefits to be added under the Distinction program.

A new enhanced premium card targeted at high net worth Canadian households, with a higher earn rate, will be offered, in addition to premium and mid-market credit cards.

The launch of two additional co-branded targeted credit cards is expected to include:

• one aimed at customers travelling frequently between Canada and the United States; and
• a second specifically for Canadian small business owners, which will allow small business owners to choose additional features and benefits specifically designed to their needs.

Both the enhanced premium and premium cards will include a suite of unique Air Canada features and benefits.

I like how earn rates are being increased. I don’t likely think they will increase the everyday spend rate as that is just not sustainable (and in my opinion even out of line with the award chart changes), but what I am hoping for is tiers of earning similar to the AMEX Aeroplan cards or perhaps bonuses with a minimum annual spend, with increased earnings for credit card spend above a certain amount. I would also think that they would improving the bonus categories of spend given that the 1.5x is generally weaker than the market standard with certain cards.

I also can’t wait for the new cards that are going to come out, which is the “enhanced premium” card. I am guessing that it is going to be a new Visa Infinite with a pricy (think $250+) annual fee that is going to try and gain market share from the current premium AMEX cards (including the AeroPlat and the Platinum) with lounge access, pseudo elite benefits, and all the other bells and whistles.

I really wonder what the two other cards that for transborder travellers and small business owners are going to be. Since CIBC already has an Aerogold Visa for business, I am assuming that their new card is going to be a separate offering from the TD equivalent, so there will be at least two small-business earning Aeroplan TD credit cards. Likewise with the new “transborder” card, I have no idea what sort of offering they are going to create. All we can do is wait and see.

I would say that it is likely that TD will enable their current First Class Infinite cardholders (which offer fixed value redemptions) given that they had the option back when TD partnered with AA, but unlikely that they will be able to pull more programs to create something a la Ultimate Rewards, since there is simply not enough airline/hotel partners in Canada. I hope to be pleasantly surprised, though. 😉

There are some parts that I find somewhat amusing, actually, especially this paragraph:

The agreement announced today sets out a framework for an enhanced financial credit card relationship. The provisions of the new agreement will help fund the enhancements to the Aeroplan program being announced today.

I guess they need lots of money to implement the distinction, and award enhancements…. or maybe they need more profits. I am little skeptical here.

Surprisingly enough, though, I think this is actually going to be a good thing for most consumers in the near future, simply because a big chunk of market share is up for grabs. I love this line:

In a number of instances during 2014, annual fees will be waived and bonus miles awarded to welcome members to the new cards.

Really yummy for consumers in the short-term! It means all whole new set of cards to get with both TD and CIBC (since current Aeroplan CIBC cardholders are going to be “grandfathered”). There certainly isn’t any (public) information on whether current CIBC Aeroplan (Aerogold/Aventura) cardholders hold their cards because of CIBC, or because of its affiliation with Aeroplan, so there’s no specific way to identify whether a significant chunk of CIBC’s credit card portfolio will move over to another bank given that the issuing bank for Aeroplan is now going to be TD.

CIBC has a right of first refusal in that they are theoretically able to match the contract which Aimia and TD have negotiated, but CIBC just had a press release on June 27, which says:

• We have reviewed the proposed terms of the new contract provided by Aimia late yesterday.
• Upon legal review, we have concluded that the notice and document provided by Aimia to CIBC appears to have been intentionally structured in a way that attempts to nullify CIBC’s right of first refusal and any ability to match.
• Given the structuring of the document and our contractual rights, we are exploring our options.

Aeroplan also has an FAQ that answers most the common questions about switching banks and what happens to my miles. Likely, there is going to be a lot of mail, online, and TV advertisement and offers and enhanced signup promotions. You can already see it with the various offers that have come out in this month and the previous ones. Very, very interesting change in the Canadian credit card market and again it will be really interesting to watch in the coming months.