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Competitors eye Aeroplan uncertainty

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TORONTO -- Loyalty credit card customers could soon find themselves being aggressively wooed if a proposed deal to allow both TD and CIBC to offer Aeroplan rewards cards doesn't succeed.

"We're definitely excited by all of the disruption that's occurring," said Linda Mantia, executive vice-president of cards and payment solutions at Royal Bank of Canada, which offers the Avion Visa.

"I think it's causing a lot more people to think about their credit card ... We're very keen to have an opportunity to tell these clients our story and bring them on board."

American Express Canada also said it plans to ramp up the marketing of its own rewards cards, which include several that allow users to earn Aeroplan points.

"We do see this as an opportunity to win over a lot more consumers onto the American Express brand," said David Barnes, the company's vice-president of advertising and communications.

Aimia, the company that operates the Aeroplan points system, announced Monday TD will take over from CIBC as its main banking partner, but Aimia said it is still trying to work out a compromise with CIBC.

Aimia said Tuesday it's possible both TD and CIBC will be offering cards with Aeroplan rewards points starting next year if the two banks can come up with an agreement.

Aimia CEO Rupert Duchesne told analysts that having both banks offering Aeroplan cards "would be an elegant solution that would be a win-win-win for us, TD and CIBC."

Industrial Alliance Securities analyst Neil Linsdell said he doesn't think it's likely TD will agree to a proposed deal that would see CIBC retain about half the Aeroplan customers.

"If you're TD, do you want CIBC to be able to offer Aeroplan points to their credit card customers? Probably not," Linsdell said.

"This is the whole reason they inked this deal; to get exclusivity on this thing so they could really get their hooks into it."

Unless the banks work out a mutual agreement, that could mean a bumpy transition for Aeroplan holders with the CIBC Aeroplan cards to TD, said Linsdell.

It would create a prime opportunity for competitors such as American Express and RBC to try to snatch up a larger share of the rewards-card business.

"If you suddenly don't have a CIBC Aerogold Visa choice anymore and you're going to transition over to TD, maybe you're going to take this opportunity to re-evaluate," said Linsdell.

"Do I really need an Aeroplan affiliated card? Should I go with a cash-back card, instead?"

That could lead to an all-out war in the rewards-card market that could give customers more choices as TD, CIBC, RBC and other competitors present comparable packages.

However, if CIBC completely stops offering Aeroplan products, that could mean customers who hold its Aventura rewards card would no longer be able to redeem their points for Aeroplan miles -- one of the "key benefits" of the program, said Linsdell.

During its second-quarter earnings call last May, RBC said it was poised to snag a larger share of the loyalty credit-card market if CIBC does not renew its deal with Aimia.

"If there's any disruption in the marketplace, it will cause customers to re-evaluate their credit card and value propositions," David McKay, RBC's head of personal and commercial banking, told analysts.

"That point of re-evaluation is a significant opportunity for us to present our solution to a large number of Canadians who might not consider them otherwise."

After markets closed Monday, Aimia announced a second-quarter net loss of $415.2 million or $2.43 per share as it took a hit related to changes in the Aeroplan program.


-- The Canadian Press

Republished from the Winnipeg Free Press print edition August 14, 2013 B6

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