Aeroplan

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SQRT
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Re: Aeroplan

Post by SQRT » 14 Aug 2013 13:29

@ Adrian2: Not at all. Market cap is equal to the total common equity value of an enterprise. In round numbers TD is worth about $80 billion while CIBC is worth about $30 billion. These figures are public, easily obtained, and thus well known.
Going back 30 or more years CIBC was the second largest bank with a market cap approaching RY. In the late 90's TD's market cap increased rapidly due to the Internet craze and particularly TD Waterhouse which had pioneered Internet brokerage in the US. At the time of the proposed mergers in early 1998 CIBC was slightly larger than TD but that was before the CIBC made several mistakes (Enron, mortgage CDS's, etc) that culminated in their CEO getting fired and the adoption of a much less risky strategy. TD, on the other hand, mostly avoided these problems and greatly expanded it's business into the US. The market seems to have judged TD's the more investor friendly approach, at least so far.
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Re: Aeroplan

Post by bcjmmac » 14 Aug 2013 13:51

Maybe slightly off topic, but has anyone else had issues using their Maple Leaf Club Worldwide card? I was initially refused entry into the Ethiopian Cloud 9 lounge in Addis Ababa, which is a Star Alliance member, but talked my way in (travelling on Ethiopian today). Card is supposed to be good for any Star Alliance lounge - card is one of the benefits I picked for 35K status since I travel to Africa for work.

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Re: Aeroplan

Post by adrian2 » 14 Aug 2013 14:01

SQRT wrote:@ Adrian2: Not at all. Market cap is equal to the total common equity value of an enterprise. In round numbers TD is worth about $70 billion while CIBC is worth about $30 billion. These figures are public, easily obtained, and thus well known.
Going back 30 or more years CIBC was the second largest bank with a market cap approaching RY.
I've been in Canada for the past 19 years, so some of the data / standings you speak of is new to me.

Don't forget TD has merged with Canada Trust in the late 90's, while CIBC stood still.
SQRT wrote:CIBC is the only bank I don't own.
CIBC and TD are the only banks I own - CIBC is my first stock bought, and I still happily hold to the original shares, plus more.
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Bylo Selhi
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Re: Aeroplan

Post by Bylo Selhi » 14 Aug 2013 14:13

adrian2 wrote:I've been in Canada for the past 19 years, so some of the data / standings you speak of is new to me.

Don't forget TD has merged with Canada Trust in the late 90's, while CIBC stood still.
Both CIBC and TD are themselves the products of series of bank mergers, most importantly, on June 1, 1961, the Canadian Imperial Bank of Commerce was formed through the merger of the Canadian Bank of Commerce and the Imperial Bank of Canada and on February 1, 1955, the Bank of Toronto and the Dominion Bank became the Toronto-Dominion Bank.

The other big-5 banks are themselves products of mergers going back to the 19th century. A more interesting question is if going forward Paul Martin's word on big-5 bank mergers will be final.

P.S. If you look carefully when you pass old bank buildings on the main streets of urban Canada you'll some with the names of the original banks still engraved in the stonework.
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DavidR
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Re: Aeroplan

Post by DavidR » 14 Aug 2013 14:56

Bylo Selhi wrote:P.S. If you look carefully when you pass old bank buildings on the main streets of urban Canada you'll some with the names of the original banks still engraved in the stonework.
I walked by the Bank of Toronto at Guy and St. Catherine in Montreal just last week!

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Re: Aeroplan

Post by newguy » 14 Aug 2013 15:08

DavidR wrote:
Bylo Selhi wrote:P.S. If you look carefully when you pass old bank buildings on the main streets of urban Canada you'll some with the names of the original banks still engraved in the stonework.
I walked by the Bank of Toronto at Guy and St. Catherine in Montreal just last week!
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Re: Aeroplan

Post by kcowan » 14 Aug 2013 15:14

ISTR that CIBC earned the title "touched by the Fuck-up fairy" by esteemed members of this board because they were usually deeply involved in all the major fiascos. I know back in my corporate life (ending in 1992), they were the only major bank who would need help with IMS from the vendor regularly.

What surprises me is that CIBC has only developed banking relationships with half the Aero Gold clients. This seems to have been a lost opportunity. And why would these types of clients appeal to TD?
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Re: Aeroplan

Post by SQRT » 14 Aug 2013 15:32

Adrian: All 6 big banks have bee excellent investments over many decades. The worst over the past 40 years has been CIBC and the best is BNS closely followed by RY and TD. Yes, agree that the Canada Trust deal was transformational for TD. CIBC was the other bank in the bidding.

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Re: Aeroplan

Post by Bylo Selhi » 14 Aug 2013 16:01

kcowan wrote:What surprises me is that CIBC has only developed banking relationships with half the Aero Gold clients. This seems to have been a lost opportunity.
I was one of those customers for many years. The only other business I had with them then was indirect through TDW in holding their index mutual funds. I can't recall a single instance where CIBC tried to get me to switch any other business over to them. They even knew I was a TD/CT customer because I paid off the card every month via PAC from a TD/CT account. If that experience is typical then they squandered an opportunity. Not that I would have switched, but they didn't even make an attempt, however feeble.
And why would these types of clients appeal to TD?
I can think of two reasons.

First, the Aerogold card is apparently very profitable. Ten years ago when they renewed the contract that's about to expire now they had a competitor bidding against them and they increased their royalty payment to AC from $200M to $350M.

Second, TD will likely try to win over Aerogold customers. I expect TD will be more aggressive than CIBC was. They have a long history of offering incentives to switch, from iPods to iPads and beyond.

Perhaps they see this as a low risk opportunity. Aerogold is profitable in its own right. Any new banking/brokerage business they can win over is icing on that cake.
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Re: Aeroplan

Post by kcowan » 14 Aug 2013 18:39

Bylo Selhi wrote:First, the Aerogold card is apparently very profitable. Ten years ago when they renewed the contract that's about to expire now they had a competitor bidding against them and they increased their royalty payment to AC from $200M to $350M.

Second, TD will likely try to win over Aerogold customers. I expect TD will be more aggressive than CIBC was. They have a long history of offering incentives to switch, from iPods to iPads and beyond.

Perhaps they see this as a low risk opportunity. Aerogold is profitable in its own right. Any new banking/brokerage business they can win over is icing on that cake.
Then why did CIBC investigate alternatives rather than renewing the deal? Is this another example of the fuckup fairy at work?
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Re: Aeroplan

Post by 2 yen » 14 Aug 2013 18:50

Bylo Selhi wrote:
kcowan wrote:What surprises me is that CIBC has only developed banking relationships with half the Aero Gold clients. This seems to have been a lost opportunity.
I was one of those customers for many years. The only other business I had with them then was indirect through TDW in holding their index mutual funds. I can't recall a single instance where CIBC tried to get me to switch any other business over to them. They even knew I was a TD/CT customer because I paid off the card every month via PAC from a TD/CT account. If that experience is typical then they squandered an opportunity. Not that I would have switched, but they didn't even make an attempt, however feeble.
And why would these types of clients appeal to TD?
I can think of two reasons.

First, the Aerogold card is apparently very profitable. Ten years ago when they renewed the contract that's about to expire now they had a competitor bidding against them and they increased their royalty payment to AC from $200M to $350M.

Second, TD will likely try to win over Aerogold customers. I expect TD will be more aggressive than CIBC was. They have a long history of offering incentives to switch, from iPods to iPads and beyond.

Perhaps they see this as a low risk opportunity. Aerogold is profitable in its own right. Any new banking/brokerage business they can win over is icing on that cake.
Bring on the iPads. 8)

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Re: Aeroplan

Post by optionable68 » 14 Aug 2013 19:26

2yen wrote:Bring on the iPads
The already did that. I suspect they will offer 15000 points and waive the first year annual fee, kind of like how CIBC did to lure over new clients year after year and then expand the overall client relationship.
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Re: Aeroplan

Post by pmj » 14 Aug 2013 22:42

optionable68 wrote: I suspect they will offer 15000 points and waive the first year annual fee, kind of like how CIBC did to lure over new clients year after year and then expand the overall client relationship.
CIBC is still running that offer - https://www.cibc.com/cc/en/agoffer/?tid=2013383 - my card arrived last week :D.
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Re: Aeroplan

Post by SQRT » 15 Aug 2013 08:36

We can only speculate why CIBC wasn't able to renew the Aeroplan Visa deal. This is their most important franchise after core chequing accounts. Sounds like personalities or culture may have played a role. Certainly a coup for TD who has been probably the most aggressive bank over the last decade.

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Re: Aeroplan

Post by optionable68 » 19 Sep 2013 18:42

Looks like CIBC got the better end of the deal.

TD will get customers whose only business with CIBC is their Aeroplan VISA, who are mostly short-term customers of CIBC only due to a "1 year no-fee free-points" promotion and will also depart once the promotion ends.
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Re: Aeroplan

Post by SQRT » 20 Sep 2013 12:10

optionable68 wrote:Looks like CIBC got the better end of the deal.

TD will get customers whose only business with CIBC is their Aeroplan VISA, who are mostly short-term customers of CIBC only due to a "1 year no-fee free-points" promotion and will also depart once the promotion ends.
No, I don't think so. TD "stole" one half of CIBC's very profitable Aero Visa business for a fairly small cost. TD' s earnings are going up while CIBc's are going down. Capital relief for CIBC is minor compared to the earnings hit. No reason to believe TD's attrition of these customers would be particularly high. Just because they don't have other banking relationships with CIBC, this doesn't mean they aren't very good Aero Visa customers.

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Re: Aeroplan

Post by Koogie » 20 Sep 2013 12:15

Called and cancelled my CIBC Aerogold today before my annual fee gets charged next week. The agent went through the spiel of offers trying to get me to stay but seemed kind of halfhearted and tired. I asked if they are getting a lot of cancellations. The hesitation before the denial spoke volumes.
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Re: Aeroplan

Post by SQRT » 20 Sep 2013 13:26

Koogie wrote:Called and cancelled my CIBC Aerogold today before my annual fee gets charged next week. The agent went through the spiel of offers trying to get me to stay but seemed kind of halfhearted and tired. I asked if they are getting a lot of cancellations. The hesitation before the denial spoke volumes.
Why did you cancel? Presumably those customers that at transferred to TD will get some sort of incentive to stay?

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Re: Aeroplan

Post by Koogie » 20 Sep 2013 14:31

Mostly as I am finding that Aeroplan is of diminishing value. Both in terms of the way they are rigging the rewards redemption and also just to me personally as we are flying less. I also just hate paying that annual fee, especially for something that I no longer value. I got the MBNA cash back MC instead and will probably get another Visa if and when I can find a good one that is also cashback.

Also, it finally severs my last tie to CIBC. I really don't like them. I have always found them the most arrogant and least customer service oriented of the large banks I have dealt with (TD/RBC/CIBC). The fact I added an insignificant drop into their ocean of lost business was just the icing on the cake.. :thumbsup:
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Re: Aeroplan

Post by 2 yen » 20 Sep 2013 20:31

SQRT wrote:
Koogie wrote:Called and cancelled my CIBC Aerogold today before my annual fee gets charged next week. The agent went through the spiel of offers trying to get me to stay but seemed kind of halfhearted and tired. I asked if they are getting a lot of cancellations. The hesitation before the denial spoke volumes.
Why did you cancel? Presumably those customers that at transferred to TD will get some sort of incentive to stay?

My local TD bank manager and I were talking about this today. I said a high memory ipad mini would do the trick. (very wishful thinking)

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Re: Aeroplan

Post by optionable68 » 03 Jan 2014 12:21

Am I missing something? Weren't the price of round trip flights to Hawaii 40,000 last week and now 45,000 this week?
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Re: Aeroplan

Post by adrian2 » 03 Jan 2014 13:35

optionable68 wrote:Am I missing something? Weren't the price of round trip flights to Hawaii 40,000 last week and now 45,000 this week?
Aeroplan balances (Airmiles to an even greater extent) are subject to what I've coined as "negative real interest rates" -- their utility goes down as years pass by.
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Re: Aeroplan

Post by westinvest » 03 Jan 2014 14:31

adrian2 wrote:
optionable68 wrote:Am I missing something? Weren't the price of round trip flights to Hawaii 40,000 last week and now 45,000 this week?
Aeroplan balances (Airmiles to an even greater extent) are subject to what I've coined as "negative real interest rates" -- their utility goes down as years pass by.
More like hyperinflation. Your point balance may not change but your cost to redeem is going up. The points required for the desirable rewards (trans ocean First and Business Class) have been going up by something like 25% a year for the last couple of years.

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Re: Aeroplan

Post by peter » 03 Jan 2014 14:36

Aeroplan posted a 2014 reward chart: https://www3.aeroplan.com/FlightRewardChart.do
Not sure if this work, it's linked from the 'use your miles' tab -> travel after logging in. Aeroplan always suffered from serious inflation but it seems particularly bad this year. Reward miles on flights are much harder to get as Tango has become ubiquitous and the difference with higher fares is larger. Cost of Aeroplan flights has gone way up in many cases (also for other FF programs, or will go up soon like for United) and availability apparently is down, perhaps unless you're E100K.

You can get a lot of free miles at the moment from CIBC/TD/Amex fighting over the credit card market (30k for Amex Aerogold, 20k for CIBC Aerogold and Aero Infinite or whatever it is called, and 15k from TD). Amex and CIBC waive first year fee, TD apparently does if you call or go to a branch. It's not so clear how much they're worth but if they put you over a threshold to get something useful maybe worth considering.

I'll keep Aeroplan but I'm no longer spending on an Aeroplan credit card and will lose my Air Canada FF status this year.

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Re: Aeroplan

Post by kcowan » 03 Jan 2014 14:39

Isn't this just a sign that they are correcting an anomaly because business class to Europe was one of their few competitive advantages?
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