We are now less than a week away from American implementing its plan to remove 40 percent of its fares from traditional sales channels, requiring travel sellers to move to systems that can use New Distribution Capability (NDC). NDC holds much promise for how air travel is sold in the future, but the reckless manner in which American has gone about implementing this strategy could do lasting damage to the effort.
NDC Should Be a Good Thing
For decades, the Global Distribution Systems (GDSs) like Sabre — the largest in the US — have been the brains behind air travel sales. They take real-time availability from airlines along with the airlines’ filed fares and build itineraries using the prices in the market. That gets presented to agencies who then ticket in the GDS. The information gets communicated to the airlines.
NDC turns this model on its head and makes the airline the brains. The idea is that the GDS or any intermediary can request current pricing from the airline on demand. It’s the airline that does the calculations and spits back options. Then the request to ticket goes to the airline where it is handled with the ticket number being communicated back. The GDS becomes a mere vessel for aggregating offers.
The idea behind NDC is that it uses a more modern architecture (XML) to deliver more customized options for airlines. It gives the airlines more control over their product, and since it’s their product, they should be able to control it. It’s hard to argue with that stance, though there has been plenty of pushback over the years.
The GDSs spent ages fighting this change, because they liked their old model which minted them money. Sabre in particular focused on blocking NDC and shares a great deal of blame for it not having had wider adoption earlier. But as is always the case, the stodgy old company that resisted change has had to come along or risk being cast aside. It has finally, begrudingly started to move forward to the point where American’s Managing Director of Airline Retailing Neil Guerin told me that in recent years “we’ve had really tight alignment between the airlines and the GDSs.”
Now, American has turned its ire against the very agencies that sell the airline’s tickets, and it has opted for a bullying strategy to get them to join the party since they too have been reluctant as well.
American Takes a Hard Line, Forces Adoption
Over the years, American has tried several strategies to get agencies to use NDC, but none of them were particularly effective. American even tried to pay agencies to use their direct portal, but that was bound to fail since it didn’t play nice with other agency systems. Agencies need an aggregator that also works with mid and back office systems. While a large online travel agency can build its own system, that is not something that all agencies can do on their own. The options have so far not been great.
Disclosure: Cranky Concierge books in a GDS and is impacted by this change which has given me unique perspective of the shift.
It has taken years for NDC to gain much traction, and part of that is because there were gaping holes in the offerings. The biggest issues have been fixed, and so American has decided the time to force the move is now. It will sell 40 percent of its fares only through NDC, so if agencies haven’t adopted that, too bad for them. American seems to feel that taking a hard line is the only way to make this work.
This absolutely lit a fire under Sabre, and the company will have a semi-functioning product ready to go on April 3 when American pulls the trigger. But the focus here is on “semi” functioning. It is not ready for primetime. You’d think American might want to have some flexibility to accommodate these timing issues, but it has stuck to its guns, and that is a confusingly problematic decision.
American’s Many Mistakes
Thanks to a mix of strategic failure, hurried efforts, weak communications, threatening posture, and inflexibility, American has done the impossible and united the agent community against it and more importantly, against NDC.
Mistake #1 – Lumping Together
American’s first mistake in this process was making the strategic decision to combine several pieces of bad news with the NDC rollout. The airline fired a huge chunk of its sales team, and it eliminated corporate deals for small to mid-size agencies. It also got rid of its “waivers and favors” program, all of which I’d written about previously. Whether these are the right or wrong moves for the airline, they are unquestionably bad news for travel agencies. So when the NDC move gets lumped right in, that instantly makes this seem like it’s going to be a bad thing when it didn’t have to be that way.
American should have decoupled NDC from the rest of this, but more importantly, it should have held off on firing its sales staff until after the cutover. The very people agencies go to in order to get answers are now gone.
Mistake #2 – A Hard Cutover Too Early
American should be proud. It got Sabre to finally get moving and adopt NDC, and it has forced even the most opposed travel agents to start the process. The problem is, Sabre’s implementation leaves much to be desired, and Sabre is the largest GDS in the US. It requires using a graphical interface that is not as functional as it should be. It also is not ready to support a variety of seemingly key functions just yet. For example:
- Only adult passenger types can be booked
- No changes/refunds/cancellations can be done at all for multi-passenger bookings
- Only one way and roundtrip bookings can be made, no open jaw or multi-city options
- No interline itineraries are supported
This is just scratching the surface, but these are obviously real concerns. American laughs this off. Neil says that the vast majority of bookings can be handled correctly, and these are just “one-offs.” He admits “we don’t expect anything to be perfect in April,” and instead says the airline will “figure a lot of that out over time.”
Sabre says the biggest problems will be resolved by year-end. This is why when the American Society of Travel Advisors (ASTA) called for a delay in the implementation until the end of the year, it seemed entirely rational. Not only was it rational, but it gave American an easy opportunity to extend an olive branch, offering to flex to help its travel partners. It chose not to bother.
What’s even stranger is that the cutover date on April 3 is also the very day Sabre begins supporting NDC connectivity. Agencies can’t even sign up for the NDC interface until that day. You would think that it would be in American’s best interest to have a fully functioning NDC connection with the largest GDS in the US for even as little as a month before pulling those 40 percent of fares out of the existing channels. That would give time for training and familiarity and have no negative impact on the airline, but it isn’t budging.
Mistake #3 – Hostility in Communications
American has not done a good job of communicating throughout this process. Part of that could be because it fired its sales team, so agencies had fewer people to ask. But the airline seems to have deliberately avoided communicating key pieces of information. When it did communicate, it came off as downright hostile.
Possibly nothing sums this up better than a letter just posted this week from American’s VP of Sales Thomas Rajan. The letter read as if travel agents should be lucky that American tolerates them. For example:
Since our announcement last year, there have been a number of opinions on both the substance and timing of our move to modern retailing. Regrettably, much of it has not been based on fact, but on a desire to maintain the status quo, versus advancing capabilities that benefit customers. Travel retailers have asked what this means for them and why now.
The answer is simple. Our focus is on the customer.
To be clear, that reads that agencies have chosen to avoid change over doing what’s right for the customer. American loves customers. Travel agents don’t.
Further, the airline seems to have little to no sympathy for any of the technological constraints that agencies face. This is the first time I’ve even seen the airline address the fact that there even are technological constraints, but the response is that they either aren’t a big deal or features “will become available shortly.” If it’s coming shortly, why not delay implementation until that happens?
Further, there are questions out there around how schedule changes and irregular operations handling will work, but the answers are all vague. This kind of uncertainty is what causes agents to revolt against the idea without knowing if it will be bad or not.
Even though American acknowledges there are shortcomings, it goes on to say “We expect our travel retailing partners to continue to provide servicing to our customers who transact through indirect channels, as per their existing agreements.” It then goes on to say that it has an industry-leading Sales Support team “that is complimentary to access.” The idea here seems to be convincing agencies that they’re lucky American will even bother helping them without charging for things they can’t capably do. This is quite an impressive attempt at gaslighting.
Mistake #4 – Failing to Provide a Strong Benefit
You would think that if you’re trying to convince someone to use your new service, you’d give them a carrot to make it better. There are some carrots, but they aren’t enough to move the needle. In the Rajan letter, there are three benefits that are singled out, starting with the ability to book paid seats for clients.
American is the only one of the big airlines that has never gotten its act together to sell paid seats through Sabre. All the others have had it for years. Pitching this as a benefit of NDC when it was entirely possible in the old system is pretty silly.
The only tangible benefit that can’t be supported in the traditional way of selling is that American will tailor fare offerings to the AAdvantage status of a traveler. That doesn’t mean it’s varying fare levels (yet), but instead, for example, it just won’t show the Main Plus bundle to an Executive Platinum member, because that member already gets the benefits.
It All Adds Up to Anxiety and Anger
In the end, there is so much frustration with the process, the lack of communication, and the inflexibility of the airline that it has steeled agents against the idea of NDC. That is a true crime.
NDC has the potential to be a great improvement. Some airlines are implementing it and have smart, measured plans to roll it out. American has chosen to just throw its weight around and push forward adoption in a haphazard way. All of American’s moves as of late have caused a high level of distrust and concern in the agency world. There was a golden opportunity to work with agencies to move this idea forward, but that opportunity has been fully squandered.
Why is American unwilling to be flexible? I have to imagine it’s a matter of timing. We’re going into what will be a very busy summer with restrained capacity and very high fares. Even if agencies balk, American will have no trouble backfilling seats in the near term. That way, it can call this a success even if it has to come back groveling to agencies in the long term when it again needs help.
I actually hope this backfires on AA. Very few benefits offered to online distributors, and a whole heap of negatives.
Some tickets will only be available on aa.com (Read SalesLink article on NDC). How much lower, we don’t know.
FROM THE ARTICLE:
The idea behind NDC is that it uses a more modern architecture (XML)
to deliver more customized options for airlines.
LOL! XML is a quarter of a century old, and hackers love it.
Supply and demand at work here.
American has a ton of demand for its product, so much so that it can’t provide enough of it to supply that demand.
When that happens they can dictate to agents, because they aren’t too worried about losing customers. They aren’t worried about that because they have too many customers already.
I wonder at the long term viability of agents anyway, in an age where the customer has all of the information at their fingertips.
We will see if this backfires, not now but when the market inevitably changes and demand falls back below supply.
I think you meant AAnxiety and AAnger, which is like, a normal day flying on American.
If I understand correctly, this change primarily impacts travel agencies who specialize in corporate or full-service travel bookings.
Will the average Joe who books a trip via an online site like Expedia experience any change to pricing flights on American? Curious how much this change will impact overall travel booking for typical leisure travel.
Yes…EXPEDIA is an online travel agency and will also be affected.
No, Expedia connected to AA NDC so they could shop, sell and service American bookings. Customers on Expedia should have access to all AA fares.
Wow- eMac— out director told us that all OTA’s were also being affected. The link you provided says otherwise.
AA tell us only that fare basis ending in A-P can only be purchased on aa.com
From AA yesterday:
Fares with letters A to P on the 8th character you can display in Sabre doing a fare quote but are only available in AA.COM
I guess we will find out Monday!
Claire – That is a separate issue. Yes, American is now breaking this into three fare types. There are those still accessed through the old way, those that can be booked by third parties via NDC, and those which are AA.com only. I haven’t even found an AA.com only fare yet, and I expect it will be used sparingly.
NathanP – No impact for the big guys like Expedia, Priceline, Google Flights, etc. They are effectively already aggregators so they took American’s NDC feed (and others) and implemented it long ago. I don’t have a full list of which online agencies have it and which don’t, but only smaller niche players would be impacted.
Has AA stolen some of the cocky “talent” from Atlanta…? Good grief they are full of themselves. I hope this backfires spectacularly because they clearly have ZERO idea how complicated NDC has been to scale up from a system provider’s perspective (not just GDS’). AA’s hard and soft product are disasters, and they will be the first one to see demand soften when the cycle shifts downward again.
“Sabre says the biggest problems will be resolved by year-end. This is why when the American Society of Travel Advisors (ASTA) called for a delay in the implementation until the end of the year, it seemed entirely rational. Not only was it rational, but it gave American an easy opportunity to extend an olive branch, offering to flex to help its travel partners. It chose not to bother.”
Agencies, GDSs, mid-office, back-office providers — they’ve had years to get their act together, as you cite with AA’s 2017 and 2019 attempts at offering carrots. How irrational would AA have to be to fall for this “just a couple more months!” when all these useless middlemen have shown that without any pressure they’ll just sit on their hands? How irrational do you have to be to believe that agencies are the brave champions of their customers when they’ve spent years doing literally nothing to prepare for this?
I get that agency tech is old and inflexible — if they want to have a business tomorrow, it’s their job to fix it! My favorite part of this, by the way, is that there are so many pieces of the crappy agency tech stack that agencies outsource — the GDS, the booking tool, the mid- and back-offices, the agent GUI — that even with Sabre’s announcement, agencies are still very, very screwed. Few have their agents using Sabre Red 360, their mid- and back-offices can’t process these, most booking tools like Concur Travel haven’t done the work to upgrade to the latest GDS APIs that have NDC content. This is of course not well-understood, it’s going to take a lot more “we’re ready!” announcements before Po-Dunk Travel in Omaha can actually run one of these bookings.
Alllll the years that travel agencies spent sitting on their hands, sticking with their crappy tech and counting on someone else to solve their problems, and now AA called their bluff. This stinks for them but I’m having trouble summoning any sympathy. (SympAAthy?)
Nailed it. This is a chicken-and-egg problem – Sabre and other technology platforms won’t prioritize the work and actually get it done unless they’re feeling true urgency from their paying customers. AA (or someone else) had to turn up the heat to make that happen. Agencies that depend on Sabre are collateral damage.
For example: “The problem is, Sabre’s implementation leaves much to be desired, and Sabre is the largest GDS in the US. It requires using a graphical interface that is not as functional as it should be.” That’s Sabre’s problem, not AA’s. And Sabre was never going to fix it until there was real money on the line.
Ultimately, the tech limitations imposed by Sabre and the other existing GDSs has limited flexibility in how airlines run their business in important ways. Sabre has demonstrated it’s unable to adapt quickly unless forced. So AA is forcing them.
It’s also looking like a very good time to push this issue. Business travel is still depressed across the board, due to a combination of corporate cost cutting and the fact that some just never rebounded from Covid. A % dip in corporate bookings through travel agencies will hurt less than it normally would. And leisure travel demand for this summer looks like it’s on track to again hit record highs, so many of those planes will be full with or without the passengers booked through agencies.
The various travel tech providers (including Sabre) will do a fire drill and eventually get their act together. In the interim, direct your fire at them, not AA.
Tech providers or agencies? Sure the legacy tech providers have messed up, but the agencies are the ones who hired them. There are tech providers who can support this, the agencies just haven’t been willing to switch from their creaky old TRAMS.
That’s the point. AA is turning the screws on Sabre and anyone else who hasn’t invested in support for NDC. The companies behind those platforms now have two choices:
1. Make big investments in getting their NDC experience up to snuff ASAP, or
2. Lose a high % of their paying agency customers to other platforms
Cranky mentioned that he’s “already actively evaluating other systems that are more receptive to NDC”, and I’m sure he’s not alone.
How much opportunity does this open for the most technologicallyprogressive agencies? In the short term, those who adopt repidlg may gain disproportionate access to inventory.
It also sounds like the American pilot contract negotiation tact has spilled over into the NDC cram-down. Welcome to the show.
Nick – I’m not sure that “technologically progressive agencies” exist! I mean, yes, you have those on the online side of the house, but for agencies that need a user interface for agents and not for the direct traveler, they are few and far between. I can tell you that we at Cranky Concierge have looked at a variety of options and there just aren’t any that have knocked our socks off yet. Whether there’s opportunity for that to exist or not remains to be seen.
Its so funny to see XML described as modern, but when we’re talking about GDS thats absolutely correct.
Jdjohn – I think about that EVERY time, which is why I wrote “more modern”
because it is pretty laughable that this is the state of affairs.
LOL. I had the same reaction. My immediate thought was, “this was a big deal 20 years ago.”
More like 30? For kicks, AA’s NDC provider doesn’t log API calls and responses, if you want those logged you have to use a janky 20 year old application that captures your network traffic. Good times.
I have a question for Brett.
As a seriously frequent flier I handle all my travel arrangements myself, and I have a lot of knowledge about it…who goes where and when. So I recognize that my knowledge base is much greater than the average consumer.
But I still don’t really understand the value provided by agents. Seems to me that all of the service they provide can be obtained by the consumer themselves?
Can you help me understand the value that is provided? I’m not necessarily speaking of your own service, as it looks to me like a specialized niche, just in general. I would like to better understand what these agents add.
I tend to think of agents as being like elevator operators, gas pump operators (except in NJ and OR), or telephone operators. With technology and education people don’t need those folks anymore…are agents like that also?
I consider myself a sophisticated traveler and have used agents sparingly, on occasion. I fly 100K+ miles a year and book all of my own airfare, hotels, even weird multi-city routings. Where I use an agent is for family vacations (African Safari, visit to Peru which included a lot of legs with long drives that required car services, etc.). I’ve also found that agents sometimes have access to better rates and can negotiate rates with resorts, etc.
Where agents really shine, though, is when it comes to IRROPS. My mother-in-law still use a travel agent and wouldn’t dare book a ticket without her because something goes wrong, she knows she can pick up the phone, speak to her immediately and she’ll fix it. I don’t need it because I’m a UA 1K and I can get through to agent almost immediately always and they’ll take good care of me. But if I didn’t have my status, trying to get through to an airline during IRROPS and be treated with any sense of urgency would be impossible.
John G – It’s a good question, and there are different answers. First, you have the TMCs which handle corporate travel. Their main function is around contracts and compliance. They can make sure they keep spend in a central place that can then be analyzed to death. And they manage corporate contracts with travel companies. It requires significant administration just to keep all that straight. There’s also the duty of care during travel itself, the agency can coordinate where everyone is at any given time which can be very important. So that’s one side of the coin.
On the more retail/leisure agency side (not talking about air specifically so it’s not about what we do on the concierge side), it’s all about expertise and ability to put together a better experience than people can have on their own. Sure, if you’re just doing a weekend trip to Vegas, you probably don’t need much hand holding. But premium agents can set up experiences above and beyond. I know one of the companies that we work with is an Italy specialist. They rent a place above, I think it was St Marks Square in Venice so that clients can come and have a much easier interaction with the place from a different vantage point. You have people who specialize in different parts of the world who can create these types of experiences that would be very hard to recreate on your own. Certainly, AI is going to have a big impact on being able to propose and book itineraries, so that will have an impact over time. But creating these lasting memories is still a work of art that can involve friendships and expertise that so far can’t be recreated. For those who are broader travel agents and not destinations specialists, they cultivate the relationships with all of those different specialists so that they can help their clients wherever they’re traveling.
Kind of a long droning answer, but I think you’ll find that people who use travel agents love them.
As an administrator in a mid-size company who handles high volume staff travel, travel agents are wonderful. I don’t want to be woken up at 3am to help someone find a hotel that’s not 200 miles from the airport, because he/she is stuck in a snow storm. I also don’t need to spend 3 hours analyzing excels to answer ESG and costs questions. My salary is not high, but I could be doing my job instead of figuring out whatever reports Expedia spits out. I am a frequent traveler myself and I plan trips to exotic locations as well, so I understand why some people would question the value of travel agents. But even for leisure travel, I prefer to use an agent when it’s more than a group of 4 people. I simply don’t want to remember the passport numbers and seat preferences for 2 aunties, 2 uncles, their children, grandpa, and grandma. I don’t want to have to worry about if there’s enough bathroom breaks on way or if destinations have comfortable benches to sit on. I just look at the agent and say, there’s seniors and children, so keep them comfortable. A good agent’s brain cells are worth every penny.
Can’t travel agents collectively give the middle finger to AA, and simply put their clients on AA’s competitors? Obviously, there are plenty of cases where this won’t be possible, and AA is the only reasonable option, but what would prevent agents from favoring more travel agent-friendly airlines instead?
Anthony – They can try, BUT this summer is going to be insane on the demand side. There will be enough demand to fill up American’s airplanes one way or another. If agents book away — as they should because they can no longer deliver the same level of service when it comes to irregular operations, etc — American will find other people. And as we get closer to summer, agents may find that American has the only options at some point or another just because of how full flights will be. I imagine once we get to the fall is when the opportunity will really arise to see change, but there’s no question that agents right now are doing everything they possibly can to avoid booking clients on American until the dust settles.
Wasn’t Sabre (sAAbre?) once owned by American, but spun off many years ago? No longer chums!
EdInWisconsin – Yes it was, but they haven’t been very friendly for a long time. Lots of bad blood there.
Thanks for the thoughtful answer Brett.
I think in time agents may be more like influencers, helping give information about where to go and stay, what deals might be out there, and so on, and maybe less about the actual nuts and bolts of ticketing, etc.
I just think that is the natural way this is going to morph. I could be wrong (I am often).
John G – I don’t think the influencers will matter in the long run. AI can probably do all that stuff if it’s just about recommendations. It’s the personal relationships and ability to put together trips in ways that make it seamless for the traveler while also creating amazing experiences. I guess we’ll see. Hard to know where AI is going but it’s moving fast.
Could also be that the world just explodes when the machines rise up.
Can travel agents go around this domestically by booking codeshares on Alaska or JetBlue (for the NEA-covered flights?) Or will this still restrict the fares they see?
CraigTPA – I guess we’ll see. Of course, that only covers a small piece of the AA network, but they are not allowed to coordinate. So how Alaska and JetBlue price will be up to them. I imagine they will feel unspoken pressure, but I guess we’ll see.
beyond the fare and product control aspect, what are the financial implications for AA and for agencies?
And what are the plans for NDC for other carriers?
Tim – For AA, it’s entirely clear that the potential risk is a shift in agency volume away from the airline. That’s less of an issue this summer when demand is so high.
For agencies, the risk is more that every booking becomes more cumbersome and less easy to assist when there are issues. But there’s so much we don’t know yet about this that it’s hard to say.
United is testing NDC as we speak but they have no plans to remove content from traditional channels as of now. Delta has no notable NDC effort that I’ve seen. European and Asian carriers are more active but often not in US point of sale.
> That’s less of an issue this summer when demand is so high.
And that’s part of why they’re doing it now, not delaying until the end of the year.
I’m at a loss and not sure what to expect next week.
So, if I log into Sabre Red, blue screen = GOOD or not? I know the stupid GUI tells me its NDC with AA. My agency belongs to a consortia with a fairly robust overlay (called ADX) and I know they are also wondering how this affects things since the platform is built as an API. I do a LOT of end-on-end combinations with AA and split the ticketing (because of their stupid fare rules and E/E blocking – which won’t work for OW partners like AS, QR, but WILL work for 9K/LF – go figure) and wondering what the future holds for that.
I think I may be drinking on monday. A lot.
@CF, what’s your workaround for this problem for the fares that are only in NDC? Presumably you can’t 100% avoid American and still serve your customers effectively. Will you need to have American’s website open on a separate screen/tab to comparison shop / book on AA.com? Is all your AA business going to have to go through AA’s website?
Well, it will depend. We don’t yet know answers to a lot of questions about how this will work on servicing bookings, so we want to make sure we’ll take care of our clients the right way. Hopefully those answers come quickly once the details are known. Certainly in the near term we’ll have no choice but to book complex itineraries on the AA website. And we’re working through how we’re going to handle it when it’s a multi-passenger itinerary since no changes will be possible in Sabre for now. We are also warning anyone looking at American options that it may take longer for us to help them if they need assistance during travel. We want to make sure we’re completely clear in setting expectations as best we can. These are all short-term issues. In the long run, we’re already actively evaluating other systems that are more receptive to NDC. I expect that the industry will move this way eventually, so we want to make sure we are best positioned.