IsleTraveller

Has anyone heard if there is going to be a change with this card and CP? My renewal date is fast approaching and would like to know if I should renew. I do not want to be caught in a situation like the AMEX cardholders.

Has anyone switched to another card, like CIBC Visa? What is the best card?

PointWeasel

End date!! I was so pissed off with the Amex situation that I have stopped using my Card and upgraded my regular Royal Bank Visa to a CPlus one. I asked the Royal Bank Visa representative whether they had heard anything regarding upcoming changes and they told me that new cards/applications were being processed as normal. This partnership could prove more difficult to end as there is something in the agreement between CP and Royal Bank that indicates as long as CP-operated aircraft fly Royal Bank is their banker and preferred CPlus member. Has anyone heard anything different?

[This message has been edited by PointWeasel (edited 05-31-2000).]

IsleTraveller

PointWeasle
How much longer do you expect to see CP metal? Their days are numbered, and according to your information, so too is the CPlus Visa!

Shareholder

I think this is a case of you both being right but it is anybody's guess -- well maybe Robert Milton knows for sure -- when the Royal Bank connection will be broken. Unlike Amex, Royal is a secured creditor of Cdn: it is the company's primary bank (as CIBC is AC's). It has a vested interest in the restructuring, and AC has a vested interest in keeping Royal reasonably happy.

That said, when Cdn metal does go, it is likely Royal will phase out its Cdn+ Visa card but there should be plenty of notice and if it is mid-way through a membership year, your annual fee would likely be pro-rated and refunded, or credited to a new Royal Visa which will be made attractive to keep your business.

AC of course does have agreements with exclusivity with CIBC (Visa) and Citibank (Diners|enRoute). A way to include Royal might come if AC spins Aeroplan off as a subsidiary company (as rumours have suggested) permitting renegotiation of credit card tie-ins.

The Cdn+ Visa remains competitive since you get the annual renewal bonus of 2.5K and first flight bonus of 2K. You are likely to just get a one-time 5K sign-up bonus with Diners of CIBC Visa, I hold off on switching cards until the dust has settled.

(An interesting side bar: Royal Visa is the official credit card for British Airways, so we may see that program brought to Canada if the Cdn+ card is phased out, and BA gets agressive in the market here.)

ALW

One big difference between RB and Amex is that the former posts right into your CP account monthly, where Amex of course maintained their own rewards program, of which CP was technically just one member (probably getting 90%+ of the redemptions).

So at worst, one should lose the unused portion of the annual fee, plus a month's postings. And of course the bank is more likely to credit $10 for unused months ($120/yr). And you know, if they're cut off prematurely, they're more likely to give a 2% cash rebate for any purchases that can't be posted to CP (CIBC offers a 2% cash rebate card with a lower annual fee than Aerogold, so it must be do-able).

I think this is a safer bet than Amex was (and I have to decide soon what to do with my MR points).

andrew

Shareholder

Like you Andrew, I've been wondering what to do with the Amex MR points that I didn't transfer in time to Cdn+.

Since I am an active Hilton HHonors Gold member, and do have an inactive DL account, I plan to reactivate the DL account. I had two flights on South African Airlines put into that account in February, but have no idea if they've been posted, and thus reactivated the account. I'd transfer the MR points into that one, and then transfer these into my HHonors account.

One gets twice the number of airline miles in such a transfer, so for every 10K of MR/DL miles, I'll get 20K HHonors points. This will put my HHonors account back in the 90K range, setting me up for another 5-night award stay somewhere (AMS was my last sojourn, and included a visit to the famous John and Yoko suite).

A Flygirl

Shareholder and others left holding your Amex points...

Article in today's Toronto Star tells of a class action lawsuit filed against Amex over this. The lawsuit does not name Canadian Airlines which is curious.

So you might want to follow this story (or jump on the bandwagon) before making any decision on what to do with them. Here's the link:
http://www.thestar.com/thestar/edito..._FI-AMEX1.html

hsi.chang

Not quite. This class-action lawsuit, which I think I would like to join, is based on the 2-for-1 CP coupon that every Amex Canada Platinum cardholder get once per year. The reason why CP is not named is simple, I didn't pay CP the CAD$ 350.00 in "membership fees", so why should CP owe me the benefit ?

With regards to the original topic of this thread, remember this, if CIBC financed the CP takeover for AC, why would they play nice with RBC ? I fully expect CIBC to do to RBC what they did to Amex, it is just a matter of timing. I'm guessing 4Q 2000, the most likely time when CPlus is wound down completely.

A Flygirl

Thanks HC for the clarification

Shareholder

Canadian banks don't operate that way. The key factor here is that Royal Bank is one of CP's major creditors. Otherwise, we don't disagree because eventually RB will be out of the picture vis a vis the new Aeroplan.

I don't know what will be gained by the class action suit. If Amex were smart, they would just advise us Platinum card members that we can still book J-class 2-for-1 tickets on select carriers through their U.S. travel service., or come up with a substitue: the year is only half over.

Much will be revealed in the coming months...

hsi.chang

This is the same Royal Bank that wil be paid some 97% of their loan by Air Canada soon, correct ? This would mean that in a month or two, they will no longer be a creditor and would have little to say about Canadian Plus.

I have a friend who used to work for Amex Canada's MR department, and one of the aspects that my friend found strange was that there is no such thing as "exclusive" in US FF programs like there is with the Canadian ones. If you honestly believe that CIBC will allow a CHEAPER Visa with more benefits (10% discount on awards ?) to survive after they've put up the money to bail out Air Canada and AeroPlan, then go ahead and renew with the RB CPlus Visa and see how far you can last.

For you Amex Platinum card holders out there, I believe everyone, or the majority, pays their annual dues on June (at least all my family members pay on that month), and I've already seen the $399.00 charge on my June statement (on-line) for services starting July. What are you planning to do ?

One more note regarding CP involvement with Amex. I am pretty certain that CP does not get a penny from Amex unless the cardholder exercises the 2-for-1 coupon, in which Amex pays CP a set fee for the companion ticket. So how does Amex justify KEEPING the $350 fees ? And with regards to the Amex US 2-for-1 offers, all those offers require you to purchase FULL FARE BUSINESS seats. I don't even need to have an US Amex to take advantage of some of them, say, Cathay Pacific.

Shareholder

You're quite right about the value of Amex Platinum without the Cdn features. As I've speculated when this all came down, this is a very serious blow to Amex in Canada, since all the banks now issue Platinum cards to their best customers and there is generally no charge for them. (Of course, they don't have mileage programs. Those are limited to Gold cards for which one pays about $150 on average annually.)

Platinum Amex did have the Empress Lounge feature for those not making Gold or ExecPlat, and it still has the NW and CO lounge access which is handy if one does a lot of U.S. travel. But right now, its overall value is dubious. My renewal does not come up until the end of the year. I have not yet cancelled my account, nor asked to downgrade to a regular non-status, no-cost Amex card, and will wait to see what enhancements are offered by year's end. In the meantime, as already noted, Amex will still be of some value to me, since I plan to use the MR program to add mileage to a dormant DL account from which I will transfer miles into Hilton HHonors points (at a 2 for 1 ratio) to boost that program balance. And you are correct noting the purchased ticket on the U.S. Platinum 2 for 1 plan must be full-fare J one, which makes it different from the Amex/Cdn offer.

But the crux of the Amex/Cdn dispute seems to be about how much Amex was prepared to pay Cdn for these tickets, miles, etc. And as we've seen from recent media reports, AC is renegotiating all Cdn's very poor (from the carrier's standpoint) corporate deals. AC is now saying to customers that the free ride is over and they will have to pay what it costs to carry a passenger, not the heavily discounted price Cdn was willing to get just to have the seats filled and the cash flowing. Everyone agrees CP's bulk pricing was becoming counter-productive. As much as I loved the carrier, it could not continue this way. (Who do you expect to pay the difference? The creditors and shareholders -- and employees -- contributed something to every ticket we all bought that was not full-fare, or at least marginally discounted. You can't run a business that way unless you are a Crown agency set up to guarantee service at any price, and the public agrees to subsidize you.)

Just to clarify your comeback on Royal Bank's role in the Cdn/AC refinancing. My understanding is that creditors do not get 97% of what they are owed paid off immediately. It is just that the agreements are modified to reflect a decrease of the principle owed to that new level. The Royal -- like others -- will continue to be a part of the financing package for the Cdn side of the soon-to-become AC subsidiary. Unless CIBC agrees to replace them and buy out their position, the two banks will be partners in the financing of the "new Air Canada". Which is not unusual, since banks often jointly participate in syndicating large corporate loans, if only to spread the risk.

Based on this ongoing participation in the subsidiary, I believe Royal and CIBC will co-exist for a while longer, if not for many years more.

As for exclusivity, this is a contractual matter between the carrier and the credit card issuers, and like all commercial matters subject only to anti-trust laws. This practice does not violate such laws, so is perfectly legal. In the U.S., all carriers have one Visa or Mastercard partner and a relationship with a T&E card like Amex or Diners, or both. Remember that AC has this second relationship with Diners (which is owned by CitiBank, after AC sold enRoute to Diners). What will be interesting to see is if the Diners point accumulation is added to the Cdn+ program.

But as I've continued to speculate, Cdn+ will likely not be with us for much longer, and once our accounts are merged with Aeroplan, this will be a defacto reality: collecting points/miles using Diners card. It is at this point that any change with Royal Bank is likely to occur, since CIBC may well wish to keep their exclusivity agreement (as sole crdit card partner) with Aeroplan. I don't believe we will see the seasonal award discounts from Royal Bank this fall, but remember that Aeroplan elites do have a discounted award schedule which somewhat corresponds to that offered by the RB [and now defunct Amex] award discount schedules.

Canadian banks are just not as cut throat as foreign ones, and their common target is those foreign banks. This may explain the hard line taken with Amex, which recently entered into the commercial/personal banking business. And as AW notes, the RB Visa will still be safe to own since points are deposited monthly in Cdn+ so nothing will be lost except future purchases if they suddenly leave the program. And the RB will also pro-rate any annual fee if you discontinue using and return the card, which can be done at any time as long as one's account is paid off.

hsi.chang

Actually, this is not a Canadian benefit. Amex Canada did not negotiated with NW and CO for this benefit. It is just that they couldn't really tell the Canadian cards apart from the US ones, or they don't really bother, that this benefit exist. On a sneaky note, even after you've cancelled your Amex Platinum, you can still "use" the card itself to get into lounges, couldn't you ?

The same can be done using the CO account. I've been trying to research if this 1-to-2 conversion to HHonors is a good deal or not. I know the 1000:233 ratio to Starwood Preferred Guest is not a good deal.

No. The dispute came because CP wanted to terminate the deal at the end of this year instead of 2002 (a la pressure from AC/CIBC). However, the only reason why the Amex MR program works financially for Amex Bank Canada is because people don't cash out all their miles. If news of a "hard" termination date was announced (say, December 31, 2000), they would have seen most members cash out. I know from personal experience that I was going to cash out as much as possible prior to the May 1 3.5K fee. The source of this tidbit of information comes once again from my friend who used to work at Amex Canada MR.

If your scenario was correct, CP would not be publicly offering to continue their relationship with Amex until the end of this year. See http://micro.newswire.ca/releases/Ap...8.html/87005-0 and note "same financial terms". I understand perfectly why Amex chose to protect their behind, but not at the expense of Platinum card memebers such as myself who has yet to excercise the 2000 (nor 1999) certificate. All Amex has to do to prove CP as a liar is to accept their terms, but instead they've chosen to point the finger at CP by brandishing their legal request (faxed) of immediate termination.


I doubt that. Otherwise, why was AC getting money from LH/UA/CIBC ? Surely they didn't need it for the $2.00 / share CP offer. The cash was used to pay off CP's debt so that it can be absorbed. If existing CP debt holders become new AC debt holders, can't see why those unsecured debt holders .....ing and complaining.

Shareholder

Sorry to go on about this, but...

Cdn did not go bankrupt. It asked the court for voluntary bankruptcy protection so it could reorder its opeating costs and debt to determine if it could continue to operate. A part of this process involves renegotiating obligations with secured (i.e. aircraft owners, suppliers and the Royal Bank) and unsecured (i.e. bond holders) parties, so as to arrive at a means of continuing an orderly payment when the company emerges from this protection stage. If such agreements cannot be reached, then the court declares the company to be insolvement, and appoints a trustee who then closes the company down and sells off what can be sold to raise cash to pay secured debt-holders whatever portion the sale raises, less ocsts.

But Cdn has been able to renegotiate its obligations and the court will soon release it from this protection stage, permitting AC to conclude the deal to take the company in as a subsidiary. In this way, AC will keep this debt ($1.4 billion according to Cdn's 1st Quarter financial report) separate from its own ($2.4 billion according to AC's 199 Annual Report). That is the important part, because it means that Cdn's primary bank remains part of the company's overall financing package, and thus the Royal Bank is not being replaced by the CIBC.

Also according to AC's 1999 Annual Report, it has advanced to a third company the funds to buy Cdn's shares and to take Cdn through this restructuring process. AC technically still does not own Cdn, though it does have board membership on the Alberta company which does. The approximately $200 million to do this came from AC's own cash reserves.

The money advanced by United, Lufthansa and the CIBC went into buying back 69 million shares from people like me who own(ed) AC stock. They bought back about 40% of outstanding shares at $16 each ($1.1 billion). This was part of the "poison pill" defence against Onex, so AC would be able to make a better offer than Onex was making to shareholders. As a result, both UA and LH have the right to convert the loan into shares once the foreign ownership limit is raised by Ottawa. (See page 6, Milton's letter to shareholders in 1999 AR.)

So the unsecured debt holders were .....ing because they are still in the company and have to settle for the revalued debt paydown they are now getting over the remaining terms of their bonds. The "vulture funds" likely bought the debt at 10-cents on the dollar hoping for a greater return, like being paid off with a conversion to AC stock. AC didn't fall for that and played hardball.

As for Amex, it would be interesting to find out how many Platinum card holders actually took advantage of the free ticket offer while it was provided. Like the accumulated points issue, it may have been more a matter of fearing a stampeed were it announced the offer would be suspended by a certain date.

Shareholder

More evidence that AC is not likely to jetison the Royal Bank Visa card in the same fashion it ended its Amex ties. This morning's Financial Post reports further on the Royal Trust mutual funds "scandal". But as part of the story it lists the major clients who have placed pension monies into the RB funds, and Air Canada's employee pension fund is the largest single such group. While the various entities do operate at arm's length, AC is not likely to do anything to destabilize the Royal Bank.

However, that said, if oneworld does reapper in Canada, I would not be surprised to find the Royal switching over their card to co- brand with that carrier, or even extend their existing UK/European BA co-branded card. In any case, there would be an amincable separation between AC and the Royal Bank.