The TD Air Canada loyalty agreement kicks off as Air Canada completes its acquisition of Aimia Canada.
TD will be the primary credit card issuer for Air Canada’s new loyalty programme when it launches in 2020.
The TD Air Canada loyalty programme runs until 2030.
As announced last November, Toronto Dominion will pay C$622m under the pact.
In addition, TD will prepay C$308m for the future purchase of loyalty points over a 10 year period.
TD Air Canada loyalty: C$100m to build the programme
In addition, TD says that it will incur costs of about C$100m over two years to build the functionality required to facilitate the programme.
TD expects the deals to cut its CET1 ratio by about 13 basis points.
“This agreement is a key milestone, providing our customers with confidence and continuity. It secures the long-term stability of a great travel programme with our Canadian national carrier,” says Katy Boshart, SVP, TD, Canadian Credit Cards. “Customers can look forward to a refreshed and exciting programme. We’re thrilled to continue offering our customers value and a wide range of cardholder benefits in 2020.”
“With the Loyalty Agreement now in effect, customers can continue to earn and redeem Aeroplan Miles as they do today. Existing Aeroplan Miles will be honoured on a one-to-one basis in the new Air Canada programme.”
TD Air Canada loyalty – taking the fight to RBC WestJet
TD rival Royal Bank of Canada is winning plaudits for its rewards strategy. RBC’s Reward programme has more than 5 million customers.
RBC is also capturing market share in the credit cards sector.
Last June, RBC and Air Canada rival WestJet teamed up to form a new loyalty programme named Ampli.
RBC and WestJet had previously partnered to offer the WestJet RBC World Elite MasterCard.
Canada’s credit card issuers will take a hit in 2020 when lower intercharge fees come into force. The current intercharge fees have helped banks to fund travel and rewards programme.
Given the profitability of premium credit card customers and the banks focus on targeting prime customers for cross-sell opportunities, the Canadian cards sector is hotting up nicely.