It is no secret that American wants everyone to book directly with the airline. It has said that travelers prefer the direct booking experience better, but it has begrudgingly allowed travel agents to continue selling tickets at the same fares as long as they adopt the newer NDC standard. Since it was going to allow agency bookings to continue, it tried to benefit by paying lip service to the idea that travelers should be able to book where they want to book. Last week’s news that American will no longer allow non-preferred travel agency bookings to earn miles shows that American is done pretending that’s the case.
Over the last couple of years, American has made a big push to get travel agents to go away from the traditional EDIFACT way of booking airline travel and instead use NDC. I don’t need to rehash this in detail, but you can certainly read previous posts — like this one — on the subject if you need to catch up.
The basic idea is this… NDC takes control away from the agency and puts it in American’s hands, making for a more consistent product offering that’s easier for the airline to service if needed. It also allows the airline to provide more options to travelers when selling in the first place. The flip side of that is that it makes it harder for competent travel agents to actually help their customers with changes and problems, because the standard has not been built out well enough yet.
There’s no question that this is where the industry is going, and if the airlines want it to go that way, so be it. My biggest quibble with American has been that the airline forced adoption of the technology by removing 40 percent of fares from EDIFACT systems before NDC systems were ready.
Traditional distribution systems like Sabre are woefully unprepared, though they do have some semblance of an ability to book using NDC. We’ve been actively using Sabre at Cranky Concierge to book NDC when options aren’t available in EDIFACT, and our agents continue to be frustrated on a regular basis. The airlines are trying to regularly improve NDC functionality, and because of that, Sabre will probably never catch up. That leaves agencies forced to look for more functional solutions, but the industry spent so many years fighting NDC that the good options are few and far between at this point.
American certainly woke the industry up when it removed 40 percent of fares, but it did stay true to the idea that it would let travelers book where they want. If an agency didn’t want to (or couldn’t) use NDC, fares might be higher, but travelers could make that decision. In some cases at Cranky Concierge, we’ve seen travelers pay more just knowing that we could actively fix problems in our system and not have to talk to American, something that isn’t realistic for an NDC booking today in most systems (yes, Sabre included).
This becomes harder to do starting on May 1 when fares booked outside of American or a “preferred” travel agent will no longer earn miles in the AAdvantage program for travelers. To be very clear, even if a non-preferred agent books a fare using NDC as American wants them to… tickets still won’t earn miles.
This goes directly against the idea that travelers can book travel where they want to book it. It also unfairly penalizes smaller agencies and will only spur more consolidation. Why? Well let’s look at what it takes to be a preferred agency.
- Must have a commission agreement with American
- Must book an increasingly higher percent of bookings using NDC:
- “A new product attribute of American’s offers is the ability to earn AAdvantage® miles. For an agency to be considered preferred, they must demonstrate their ability to clearly communicate to customers when they earn AAdvantage® miles in the online booking tool throughout the booking flow before a purchase is finalized.”
Smaller agencies don’t tend to have commission agreements on their own. That’s especially true since American gutted its sales team and doesn’t have the bandwidth to deal with smaller agencies. So, agencies either need to find a larger host agency that is preferred or just decide they can survive selling tickets that do not earn miles. Neither option is ideal.
Many of the big host agencies have been slow to adopt NDC and offer functional tools, but they do have the commission agreements. It’s now a tradeoff for an agency when it comes to deciding whether to pursue the commission agreement or better technology. Now American says you have to have both.
This makes it easy for the likes of Expedia and other online travel agents that already largely use NDC to be preferred since they don’t care about actually servicing bookings after the fact. It’s the agencies that actually provide a higher level of service that are punished here, and that makes no sense.
Even worse, American hasn’t released a list of who will qualify as a preferred agency, nor will it do that until April. By going with this strategy, it has been able to sew doubt into the minds of travelers. American emailed its AAdvantage members about this, so most of them have gone straight to their agencies to see if they’d be preferred. We’ve had multiple inquiries at Cranky Concierge, and all we can say is “we don’t know, but if not, we’ll find a new host agency that is”
The reality here is pretty clear. American does not want you to book through travel agents, and it doesn’t really have a good reason. This is a very strange and unique stance that differs from nearly every other airline, even Southwest.
Many airlines have complained about the costs of booking through travel agent systems, but their solution hasn’t been to ban it but rather put a surcharge on tickets booked through those channels. I still think that’s misguided, but it does at least preserve choice.
Then there’s what United has done, using more advanced internal systems to create what it calls “continuous pricing.” This can’t be supported in EDIFACT for technological reasons, so United has said it will leave everything in EDIFACT (except Basic Economy) and then offer NDC connections to agencies so they can book the cheaper fares. I understand this as well.
American has none of this. It continues to file its fares the same way. It just blocks many of them from being sold through traditional channels. And now it won’t allow anything to earn miles if the agency itself isn’t bowing down to do what American says even if it goes against what the customer wants. American is just being punitive against those agencies who are trying to provide a higher level of service to customers. This whole thing is backwards.
The rules on how an agency can become preferred are squishy and vague. That’s clearly by design. This is a way for American to either force NDC adoption or banish agencies from booking American tickets. Even the metrics are squishy, so American can really just play the role of kingmaker. The agencies it likes will be fine. The others will not. It’s a war that shouldn’t be happening, because there’s no good reason for it. Yet American continues to march ahead….
49 comments on “American Expands Its War Against Travel Agents to Now Punish Travelers”
Sounds like AA is telling everyone if you don’t want to book with us directly, well then fly someone else. Great business move.
Well, that’s really the question–how does this work as a business move? If they can drive business in the way they want to, without losing too many people, then it *is* a good move, as much as people like Brett are understandably angry about it. But if they lose profitable customers, then it was a bad decision.
I’d really like to know the answer to this question, but I’m not sure anybody outside of the green-eyeshade people at AA will ever know.
Late state capitalism FTW!
*Stage
oops typo
Freudian slip? ;)
Technically it wasn’t wrong if you give it a little thought, but also it was funny as typos go.
One more reason I’ve stopped flying AA and stopped recommending it as an option. Also, they force seat purchases on all flights and that makes AA no better than Frontier.
How much do/will these issues affect the agencies that the larger corporate customers tend to use to manage their travel spend (i.e., the ones that employees of big companies have to book through, instead of booking directly with the airline)?
If so (i.e., if a VP/C-level exec/procurement person can’t earn miles with American, or if they/their admin can’t get the service they are used to from the travel agency when issues arise with their AA bookings), this could backfire in a big way and the next round of negotiations with AA’s premium corporate accounts could be very interesting.
As someone who has to book my work travel through a large corporate agency, after getting that email from American, I wondered if I should start having my AA flying credited to my Alaska Mileage Plan account, rather than to AAdvantage.
Kilroy – So, corporate contracted fares will still earn miles regardless of where they were booked. This is helpful, but also remember that American basically got rid of its mid-market contracts last year, so there are a lot fewer companies actually on corporate contracts than before.
Good to know, thanks for the insights.
In other words, AA’s big corporate customers can still use the agencies and get some service from their agencies, but everyone else (including the SMEs [small & medium enterprises], some of which will become big corporate customers in a few years) is being ignored by AA and told to buy through AA.com or buy from a competitor.
I assume that as smaller companies grow their travel spend, some will have spend that reaches a point where it meets the minimum for AA to respond to their RFQs and to consider setting them up on corporate contracts, but it still seems like there’s a risk to AA of the customers getting “locked in” (or preferring, based on loyalty status, miles, etc) another airline before the customers get large enough for AA’s sales team to deal with them.
Do I understand also, you can book your travel using the smallbiz account where you WILL get credit for mileage flown. Your company, however, will not get the perks. That is what a 40 year+ agent told me. You are best to find a preferred agency.
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Claire – I assume you’re talking about AAdvantage Business which does require booking only online directly with American. That continues to earn miles as usual but it does not allow agencies to be involved.
“…American will no longer allow non-preferred travel agency bookings to earn miles.” AA was the first with a frequent flyer program; might it be the first to bail out of the FF ecosystem?
The frequent FLYER ecosystem is already dead. They have all become frequent BUYER programs. Flying has little or nothing to do with them.
Fact: AA’s profits from flying are, more or less, chump change. The *REAL* money comes from the [dis]AAdvantage program and it’s shiny bits of plastic.
True. Because people still feel it has value. It does not. Take your 2% cash back rewards America and be done with these clowns!
Talk about gaslighting… “A new product attribute of American’s offers is the ability to earn AAdvantage® miles.”
In what way, shape or form is earning miles on tickets a NEW product attribute?
Just another day in post-factual America. Sadly.
so sorry to see this further evolution, CF, but it is clear that AA has decided that a mass-produced, volume strategy is the way they believe they can make money which they currently aren’t doing very well now. Given that the legacy carrier model has historically been more service and customized focused, AA is taking a very different tact from DL and UA – and AS to the extent that AA and AS still overlap – although AA has already decided to cede many of its directly competitive AS markets to AS.
I guess the real question for you is where you go with this reality. I’m not sure there is much that you can do and I hate to see you get hit. However, I am certain you have a “now, what?” plan and would like to know how well that plan can overcome the financial impact of AA’s decisions and how you respond to them
Slight correction Tim, it should be devolution as AA is devolving into something that we won’t recognize in a few years. That is if they maintain their position as a functioning company.
It’s going to go the other way.
Once AA shows that they are going to win with this move, and they will, the other legacies will jump on board.
I know Brett doesn’t want to hear this, but no one uses an operator to make a phone call anymore. No one uses an elevator operator.
Only in New Jersey do people pump gas for you.
And in time, you’ll always book your flight yourself.
Travel agencies will exist to provide advice and planning and they will work with influencers. But you’ll buy tickets on your own.
American is clearly trying to compete with the cheapos. So be it I guess.
John g – None of that makes any sense. If people stop using travel agents on their own, then fine. American will win that way. But people continue to choose travel agents for one reason or another, and American is telling them to stop doing that. But why? The agencies that are going to be the most impacted by this latest move do not have any commission agreements.
There is no cost there. There is a cost of distributing through distribution systems, so if that’s your real concern, why not just put a surcharge on those bookings to recoup the costs? Several airlines do that today including Lufthansa, Air France, and BA. Air Canada is doing that soon as well. So there is no cost. All American is doing is restricting choice and preventing travelers from doing what they want to do. There is no value in this plan.
Except to American. Oh, you meant value for the customer? That’s a good one! ?
Well, since I will stay home rather than fly on American, this is not a problem for me. Bet there are a lot of folks out there with the same attitude, especially if they have experienced what a poor airline American has become.
Wait, no Cranky Jackass?!?
A few questions:
1. How has Delta been treating NDC?
2. Have American’s actions driven you to book away from them? I guess this might be confidential info lol
3. Have United and Delta made any noises about following AA’s recent moves in terms of cutting sales teams and the like?
4. How much of this is Vasu Raja?
Angetenar – 1) Publicly, Delta has done nothing, saying NDC isn’t ready so it isn’t pursuing it. But it has to be working on something behind the scenes.
2) Absolutely. Of course, we can’t force people not to fly American, but we do try to offer other options if they are similar or better, explaining how we can make their lives much easier if things go wrong.
3) Not that I’ve heard of 4) Most of it? That’s probably not fair. I think it’s Vasu and Scott Laurence together.
Vasu most definitely. Who is he and what does he know about anything? Isn’t he a marketing manager?
I work in the entertainment travel industry. There is no way on earth American can handle direct bookings from tv/movie productions, music tours, corporate travelers and large groups. They can barely handle a single passenger booking on their website and even that has limitations for the passenger. They have made themselves clear that it’s their way or the highway so i have stopped offering them as an option. If the client still wants to fly them, I gleefully explain how we will be unable to help them in the event of a lengthy delay, cancellation, schedule change or any other IROP situation. If they still choose AA, they are on their own. 9.5 times out of 10 they choose the other option. That’s a long and lonely highway, and if you decide to take it, I wish you the best. It won’t be pretty.
This speaks volumes.
When operational meltdowns take place, s theyre prone to do with frequency, agencies have done a lions share of recovery work. Work that AA won’t be able to handle.at the end of my corporate booking days, recovery work and changes amounted to almost half my work load. I’m fortunate now, when I travel ,I just buy my way out if trouble!
A bit off-topic, but just a an indication of the dysfunction of American’s self-serve options: I’m currently tracking a flight that’s in the air between Phoenix and San Francisco. It’s 22:24 here in California, 23:24 in Arizona. But when I go to the AA app (or is it an AApp?) and search for this flight (that’s in the air right now) by route, it comes back with an error: “To retrieve flight information for yesterday, please search by Flight #”. Pretty bad.
It’s actually “crAApp” lol
> The reality here is pretty clear. American does not want you to book through travel agents, and it doesn’t really have a good reason.
I think you’re misinterpreting this. My read is that American is trying to force a migration to support NDC, and that requires coordinated effort across multiple actors in the travel ecosystem (technology providers, host agencies, etc.) But the cost of the migration and limited (negative?) benefit for many actors means that it hasn’t happened. “Nudges” haven’t worked, withholding some classes of fares hasn’t worked, so now they’re getting out the big stick. “Use NDC consistently, or *your* customers will have a visible cost and be very upset with you”.
I sympathize with you since smaller agencies are really just caught in the crossfire here. This move is mostly targeted at host agencies, and the fact that you say “we don’t know, but if not, we’ll find a new host agency that is” means that it’s working as intended. This is going to light a fire under the host agencies to use NDC as frequently as possible on AA bookings ASAP.
The fact that NDC doesn’t actually *work* when you need to make changes to support the customer is frustrating. My guess is that the AA execs have somewhat rose-colored glasses on this, and think “those issues will be fixed in the next couple quarters”, even if that’s wildly optimistic. That would certainly match many technology migration projects I’ve seen at various companies.
Making a coordinated move off of an obsolete technology platform is extremely difficult, so I’m somewhat sympathetic to AA here, even if the technology itself is not ready for prime time on day 1.
Alex –
> I think you’re misinterpreting this. My read is that American is trying to force a migration to support NDC, and that requires coordinated effort across multiple actors in the travel ecosystem (technology providers, host agencies, etc.) > But the cost of the migration and limited (negative?) benefit for many actors means that it hasn’t happened. “Nudges” haven’t worked, withholding some classes of fares hasn’t worked, so now they’re getting out the big stick. “Use > NDC consistently, or *your* customers will have a visible cost and be very upset with you”.
If this really is just about pushing to NDC, then why not restrict mileage earning to those booked using NDC? They could do that for the domestic market where just about every fare should be available using NDC, and then any agency would have the option. That would certainly get the message across. This is a sloppy policy with a poor implementation plan, so it fits nearly everything AA has done with the sales world over the last couple years.
> I sympathize with you since smaller agencies are really just caught in the crossfire here. This move is mostly targeted at host agencies, and the fact that you say “we don’t know, but if not, we’ll find a new host agency that is” means > that it’s working as intended. This is going to light a fire under the host agencies to use NDC as frequently as possible on AA bookings ASAP.
But it’s not that simple, because most host agencies aren’t very good at NDC. This forces smaller agencies to use hosts when they might consider going out on their own to book AA otherwise, especially as AA continues to make commissions disappear. That’s not an option any longer.
> The fact that NDC doesn’t actually *work* when you need to make changes to support the customer is frustrating. My guess is that the AA execs have somewhat rose-colored glasses on this, and think “those issues will be fixed in > the next couple quarters”, even if that’s wildly optimistic. That would certainly match many technology migration projects I’ve seen at various companies.
No, AA execs know the score here exactly. The NDC issues they can get resolved, but that doesn’t mean it gets handled by the tech providers in the same fashion. So AA can update functionality in its pipe, but the companies like Sabre and others have to then integrate that. It takes far longer than it should to get any of that tech work done.
> If this really is just about pushing to NDC, then why not restrict mileage earning to those booked using NDC?
Because they’re trying to force a complete migration to NDC, not just shift some bookings. That’s why the “NDC booked threshold” is set to rise over time.
> This is a sloppy policy with a poor implementation plan
No argument there
> No, AA execs know the score here exactly.
Every exec presentation on software projects that I’ve ever been to has presented a roadmap and milestone schedule that is much more optimistic than what actually gets achieved. AA execs probably think that many of the NDC issues *on their side* will be resolved soon, even if that’s not true in practice.
> The NDC issues they can get resolved, but that doesn’t mean it gets handled by the tech providers in the same fashion. So AA can update functionality in its pipe, but the companies like Sabre and others have to then integrate that. It takes far longer than it should to get any of that tech work done.
The tech providers (and the customers of the tech providers) are exactly who this policy is aimed at. AA has concluded (probably correctly) that unless there is a very strong forcing function, the tech providers will probably *never* integrate NDC in a satisfactory way. This is AA saying “if you don’t make NDC integration your top priority, your customers are going to be screaming at you and threatening to drop you for a competitor”.
I sincerely sympathize with you and other agencies, though – you’re very much caught in the crossfire as AA seeks to influence the behavior of others in the ecosystem.
I think it’s quite simple. AA wants everyone to book direct, but if they cut off all travel agencies from receiving miles, it would generate a lot of pushback. Therefore, they muddy the waters by giving miles only for some travel agencies and not others. This prevents anyone from saying “you only get miles if you book direct” but at the same time encourages people to book direct.
It’s been a while that I don’t get frequent stay benefits when I book a hotel where I have a chain membership when booking through an OTA. I can see the providers not wanting to pay both commission to the TA and benefits to their members if they don’t have to. How did hotels get away with this and airlines did not immediately follow? Is it the airlines’ technology didn’t lend itself to a quick switch? If you know the trade-off for hotel bookings, you can choose to book direct or through an OTA. I see AA trying to push people hard towards the book-direct channel because of the value to them of the FFP. Am I missing anything?
AA has absolutely made it clear that they want everyone, including agencies, to only book via NDC. The problem is it doesn’t work. EDIFACT technology is not obsolete. It works. If they want to replace it, fine, but give us something that is functional instead of garbage they are pushing on everyone. The fact they created SABRE in the 50’s, and I am still using it today, says a lot. But it works. I have seen NDC, I have tried to use it, but it is so dysfunctional, and lacks many of the functions that current (and past) EDIFACT system have, that they need to produce a functional product before stomping their feet and throwing a tantrum because no one wants to play with them. We do want to use it, we just need for it to work in every situation that arises with our clients the way SABRE does. That’s all. Get over yourself AA. No one likes the bully. Put on your big girl panties and stop whining. My clients are perfectly fine with the other options available to them.
I could not have stated this better. If NDC were good, it wouldn’t be a problem, now, would it? But it’s not. Sure, if all one does is make simple AA bookings and NEVER change them, fine. But the practice of business/corporate travel is all about changes, maintenance on bookings that have schedule changes, and IROPS. NDC fails on those issues and don’t be fooled by AA marketing that tries to say to the contrary. I was for nearly 40 years a corporate agent. When did we have to call an airline for help changing an “edifact” booking? Practically never. Airlines expected us to handle all our bookings. And we provided a service that was cheap for them. When did AA ever pay for a health care plan for a Travel Agency? I will say this: provide a wonderful product in NDC and agents will use it. No one wants to work harder on a booking than they have to.
Now that I am retired, I no longer have access to a GDS so I have to use airline sites all the time. If NDC is like AA.com, I would rank it as a very poor system. Why? I book a lot of travel for myself and when I use AA.com what am I confronted with when I need to make a booking change? A pop up screen that advises me my booking cannot be changed online and I have to call an agent. I have to call an AA agent. Every booking, every time. So why should travel agents expect to think NDC is good if this new distribution system makes them have to engage an AA agent for changes/modifications/updates when edifact doesn’t? Which is the better of the two in those cases? The GDS Edifact bookings, at least, empowers agents to handle the changes and get the tickets reissued. NDC does not from all I hear.
The only purpose of NDC is “Nickel & Dime Capability” distribution to help airlines sell their ancillaries.
AA views itself as America’s low-cost network carrier, notwithstanding reality being that it has high costs. Its focus is to compete primarily on ticket price, with an eye toward infrequent travelers and leisure travelers. The calculus was probably that these less sophisticated passengers booking through OTA’s based on price don’t care too much about AA miles in the first place, so AA can save big by not awarding them in such instances. AA was already disfavored by the bespoke agents/sophisticated travelers who used agents like CF, so AA figured there wasn’t much to lose by making things even rougher on them. Of course, they could have taken a more nuanced approach to avoid punishing the more profitable customers who prefer using TA’s…but this is AA we’re talking about here.
Lars – But it’s the opposite. The OTAs will all be preferred whereas the rest are the ones who have to struggle.
I agree with you Cranky–Expedia will be preferred. Will big corporate host agencies? What have you heard–anything??
Claire – American is playing games here and refusing to tell people. Some agencies feel confident they will be included, but in the meantime, American can create doubt and try to get more people to abandon agencies.
While AAs communication and overall implementation of this are extremely poor (understatement of the century), they are trying to take the lead and get something, anything done. Having been to some of these IATA NDC working groups myself, I can tell you it is a bureaucratic nightmare getting something productive accomplished. This standard has moved at a glacial pace for over a decade because all the vendors and travel suppliers can’t agree on anything. As an airline, one can’t blame AA for not wanting to support 3 messaging standards indefinitely (TTY, EDIFACT, and NDC XML) with no end in sight. So here they are with the stick approach, and we’ll find out soon enough if it moves the needle in the right direction.
FWIW, my employer recently asked everyone to start checking fares for AA, UA, and LH directly on the airline website, because Amex GBT hasn’t been able to show the best fares in many cases.
So it’s not just the little agencies that are impacted here – the big players have a big NDC problem as well.
I was a corporate travel agent from 1974 to 1994. (I also did a lot of leisure travel and FIT’s) I started out hand writing tickets and retired when almost everything was done through computers. In my case, I worked in agencies using SABRE.
I left the business in the mid-90’s when American started – in earnest – to cut the travel agents out of the reservation/ticketing process. They’d been nit-picking the earnings of travel agents for years, but in 1994 or so, they went directly after us by stopping the payment of commissions. The other airlines followed suit, glad to have AA do the dirty work that made them more money. I left the business for other, more gainful employment.
I’ve tried to stay current about what was happening in the industry I had known so well and missed so much.
American Airlines has been screwing with the traveling public for many decades now. This “latest” is just that, the “latest”.
I fail to understand how this isn’t a blatant violation of section 1 and section 2 of the Sherman act.
Could you do a post reviewing American Airlines’ actions and the provisions of the Sherman act.
shimon – I’m not a lawyer and wouldn’t be able to get into a legal review like that.