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Will TD win the Aeroplan Sweepstakes?

MONTREAL — Aimia, the parent company of Aeroplan, is prepared to terminate its relationship with CIBC if CIBC does not match contractual terms offered by TD Bank. CIBC has until August 9th to match TD’s terms.

A switch would mark the end of a long standing relationship between CIBC and Aeroplan. The market has known for quite a while that CIBC and Aimia were in tough negotiations over the country’s largest travel rewards credit card program.

Aimia has revealed that TD would make a $100-million upfront payment in 2014 to fund program changes and has offered Aimia a 10 year agreement beginning January 1st 2014. What isn’t clear, are what some of the other terms are that would off-set the risk Aimia is assuming by making the switch. How much more is TD paying per point? Have they guaranteed any of Aimia’s gross billings? What marketing commitments has TD offered Aimia? Will they be buying the portfolio from CIBC or will they be starting the program de novo through marketing origination. What’s happening with the contract between Air Canada and Aeroplan? Answering these questions will go along way to determining the ability and willingness of CIBC to match TD’s terms.

What is clear is that any change will benefit consumers. We can expect CIBC, TD, RBC and others to compete viciously to retain and/or win-back cardholders through the use of annual fee waivers, welcome bonus points, retention bonuses and the like. Expect a massive ramp-up in marketing efforts and noise as the market sifts through the dissonance. This is the time for Canadians to comparison shop and find the best credit card for them, offers will never be richer.

More to come.

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