It was probably only a matter of time. After American removed 40 percent of its fares from traditional third-party channels using EDIFACT in April, the other airlines have been closely studying the results to see whether they should follow or take advantage of American’s mistake. Though we won’t know if American made the right move for some time, United has now started to follow… but only in a very limited way.
In an email sent by United’s SVP of Worldwide Sales Doreen Burse via United for Business, the airline announced:
Basic Economy fares (domestic U.S. and short-haul Latin America) will be removed from sale in GDS EDIFACT channels effective September 5, 2023. From that date forward, these fares will only be offered via united.com, the United mobile app and NDC enabled channels. Basic Economy fares are designed to work in concert with ancillary sales. EDIFACT is not able to sell ancillaries, therefore it is not an appropriate channel with which to offer our Basic Economy content.
This is a relatively minor move since many if not most of the corporates and agencies that use traditional channels actually block Basic Economy from being sold anyway, but it’s still somewhat telling.
United has been taking a very cautious approach with its NDC strategy. The airline has left all fares to be sold through traditional third parties as long as the old EDIFACT system could support them, and that is a big caveat. After all, EDIFACT requires there to be an array of fares filed that correspond to different booking classes. If a booking class is available, then that fare can be sold. If the booking class isn’t available, then it goes up to the next lowest fare.
Let’s look up fares from Los Angeles to Newark on December 12 to better explain. In coach (excluding B class which is an Economy Plus buy-up and N class which is Basic Economy), United has 13 different buckets ranging from G at the bottom to Y at the top. Here’s how that one flight prices in each bucket:
These classes are nested, meaning that if one fare class is closed off, so is every lower fare class below it. In this case, say that only U and higher are available. That means it’ll be $538.90. But if U is closed off and only E is open? That price jumps nearly $200.
United’s own system can price in between those levels using what it calls “continuous pricing,” giving a granular increase if so desired with the potential for infinite pricepoints. In other words, if U is unavailable, United could sell a ticket for $558 or $596.38 or $632 or whatever while the traditional channels are sitting at $728.90. EDIFACT can’t support that, so United can’t offer it via traditional channels. I see no reason why United should be held back by traditional technology if it can do a better job using newer technology.
But now that United is actually removing fares that can be sold via EDIFACT, it is a different story. As United says, Basic Economy is designed to work in concert with ancillary sales, but that’s not really true. Basic Economy was designed to specifically work without ancillary sales. It blocks you from bringing a carry-on bag. It won’t allow changes. Yes, you can upgrade to regular economy for a price, but is that really the only issue?
I reached out to United to explain, but I did not get a response.
Whether there is a technological issue or not, this absolutely changes precedent. United’s previous strategy was to not remove fares from traditional channels but rather add new fare options through new channels that couldn’t be supported by old ones. This is now very clearly a move to take away fares that had been sold through traditional channels previously.
United says it wants to have open dialogue about this, and the airline has put out a website touting the greatness of NDC. Unfortunately the header says “Transforming the travel retail experience by unlocking personalization and value,” and that instantly put me in a bullshit coma that prevented me from digging much deeper.
Though Basic Economy is a relatively minor issue, it certainly points to the continued broader trend of airlines migrating toward NDC and away from traditional EDIFACT channels. Though I still believe American moved too early — we won’t really know if that’s true or not until we’ve gone through winter — there was little doubt it would eventually get to this point.
United has been very measured with its moves, far more so than American. The removal of Basic Economy shows that United is ready to push harder, if ever so slowly.
13 comments on “United Starts to Follow American by Pulling Fares From Traditional Third Party Channels”
As they say a broken clock is right twice a day. It seems to me like American happened to make the switch at the moment the clock showed the correct time. Before we start patting AA on the back for their brilliance, let’s see what happens in winter of 23/24 when the chickens come home to roost.
Thanks for another good update, CF. IMHO, UA made this change as a communication message to both TMCs and corporate travel managers (CTMs). As Cranky noted, these fares aren’t bought by corporate travelers, and I’m guessing that UA is looking at future booking trends and seeing that AA is not being hurt by their April announcement. With this change, UA is signaling that it intends to pull additional fares from EDIFACT if TMCs and CTMs don’t start moving share from AA this fall.
IIRC, Ms. Burse made an earlier pronouncement that UA would not be “uncompetitive” with AA from a cost perspective, which tells me that UA would consider both removing fares from EDIFACT and “right-sizing” their sales force if AA was able to do so without paying any penalty in their customers’ eyes.
Off topic, but “bull$#!t coma” (trying to keep my version of the phrase safe for work) is a great phrase and one that I will DEFINITELY be stealing in the future.
I LOL’ed reading it
seriously, we are drowning in BS with our new frenemy chatGPT
AA’s NDC is a total disaster. TOTAL. Twice this week AA NDC did not show a nonstop flight DFW-Ontario. I tried selecting time time of day…-zero results. I tried selecting ‘anytime’ …zero results. Back and forth I go trying to find the flight I wanted. I ended up selling in Native Sabre instead.
It took me 5 minutes to book/ticket and COMPLETE a sale on AA NDC (that includes going over to aa.com to enter the known traveler number).
I could have ended my Native Sabre ticket in less than a minute. I guarantee it.
I am TRYING to like AA/ NDC…but she is not my friend yet.
“United says it wants to have open dialogue about this, and the airline has put out a website touting the greatness of NDC. Unfortunately the header says “Transforming the travel retail experience by unlocking personalization and value,” and that instantly put me in a bullshit coma that prevented me from digging much deeper.”
What a memorable quote!
“United says it wants to have open dialogue about this, and the airline has put out a website touting the greatness of NDC. Unfortunately the header says “Transforming the travel retail experience by unlocking personalization and value,” and that instantly put me in a bullshit coma that prevented me from digging much deeper.”
What a memorable quote! The bullshit was layered on quite thick.
In some cases, airlines might be hurting themselves by pulling flights off of 3rd party channels.
If you are making a reservation for a route which you are unfamiliar with, you might not know which airlines are flying on that route. This is particularly so, if an airline is new toa particular route. I would think that the airlines would want the advertising which 3rd party websites provide, so that potential customers know that an airline is flying on a certain route.
Dominick – No airline is removing flights from third parties. This is just about removing some fares.
Removing the lowest fares is somewhat similar to removing the entire airline from a 3rd part website. Many people will not check with a given airline’s website to see if that website has cheaper fares than another airline which has cheap fares on the 3rd party website.
Some people will accept the highest fares, particularly if all other fares on all airlines are sold out on the route. Some presence on the 3rd party website is better than no presence, but the more you reduce your presence on the 3rd party website, the more passengers you might lose.
Dominick – This isn’t really an issue for websites. The big sites like Expedia or Priceline all use NDC and won’t have the content removed. This is more for traditional travel agents and corporates that use these systems.
You have to give United credit!
They really have a way words on their new distribution strategy.
“Align costs with value in distribution channels while reducing economic differences between the channels”