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.