For the last year and a half, American has been involved in a war against travel agencies, companies, and travelers themselves over how and where they can book their travel. General Vasu Raja led the fight, and, well, he lost. Badly. Now President Robert Isom has removed General Vasu from his post, as he tries to salvage the war effort.
Under Steve Johnson, previously Chief Strategy Officer, the plan now appears to involve a quick 180-degree shift in tone and substance. In the first communication sent broadly to agencies since the abrupt change in strategy, the airline took a much softer tone than it had taken in a long time, and as had been promised, it included a lot of carrots instead of sticks.
What has changed of substance? I’m glad you asked.
As had been previously stated, American will not penalize travelers by limiting mileage-earning opportunities based on where they choose to book. That was supposed to go into effect next month, but it has been scrapped entirely. Now the vast majority of fares will earn mileage regardless of where they’re booked. But that’s just the start.
American announced it had “begun returning content” to the traditional booking channels. These were the 40 percent of fares that were initially removed from standard agency booking channels in April 2023, forcing agencies to use New Distribution Capability (NDC)-enabled systems to gain access to those fares. This did not work well enough, and adoption was not nearly what American had hoped. Instead, agencies and corporates began shifting share away from American. With that in mind, it should be no surprise that this has already almost entirely been rolled back based on my spot checks.
I say “almost,” because it is not being rolled back entirely, and that’s by design. American will continue to keep Basic Economy fares out of traditional channels. United already pulled its own Basic Economy fares out awhile ago, so this isn’t a surprise, nor is it going to cause any agencies real stress. Few corporates are buying Basic Economy for their travelers. (And if your company is… why are you working there?)
American will also keep the extra fare types it rolled out as NDC-only… in NDC only… going forward. Those are:
- Main Plus – bundled economy fare including extra legroom seating, priority boarding, and one checked bag
- Main Select – bundled economy fare including extra legroom seating, higher priority boarding, priority check-in, and free same day changes
- Flagship Business Plus – bundled business class fare including a third checked bag and Flagship First dining where it exists
You might think as I did that American would want to put these into traditional channels since it would appeal to the business traveler and help raise revenue more quickly. There is no technical limitation that prevents offering this via traditional channels, but I suppose this is American’s way of trying to keep any momentum going to try to keep agencies booking NDC even though most fares are back in traditional channels.
This might sound like using a stick, but it’s not really. To make it even more attractive, when travel agents book Main Plus/Main Select/Business Plus, American is giving commissions. And if agencies sell paid seats for travelers, those will also come with paid commissions. That is not something that has been broadly done in the US by any airline before, paying on ancillary sales, but it is bound to get agencies’ attention. All of this is only through September 30, so it’s temporary, but it’s definitely a big change of tune compared to what American was doing previously.
Over time, American says it will make more available in NDC only, including new dynamic fares (or as United calls it, continuous pricing) and new bundles. Details on that are scant. The letter simply says “more details will be shared in the coming months.”
The letter is unsigned, but it does end with this:
For all of our partners, we are listening to feedback, learning and adapting. We look forward to continuing our discussions with you as we evolve, and thank you for your partnership.
This is a far cry from the messaging the airline was using just a month ago, but that alone won’t be enough to get agencies and corporates to just come back right away. This is going to be a long process; it’s even tougher to claw share back once the other airlines have taken it.
At Cranky Concierge, we are still wary. We continue to provide clients with the best available options as we always have, but if there’s ever a tie, we still lean toward pretty much any other airline. American may have softened its policies, but it no longer has the infrastructure or programs that allow us to help our clients the way the other airlines do if something goes wrong. We want to book airlines that make it as easy as possible to take care of our clients, so American is still at the bottom.
So, it’s going to take some time. But hey, this is at least a start.
27 comments on “American Begins Its Apology Tour Over Sales and Distribution Fiasco”
The American attempt to limit miles earning for their travelers was an epic, hilarious and perplexing disaster for the airline but I don’t think it will impact flier choices all that much… most fliers aren’t in a position to even care about an aborted initiative like this as much as you are Cranky, let alone be affected by it to the point it will change their flying habits…
Agreed. This is a subset of a First World problem mainly of interest to TAs and those who aspire to the mystical CK tier.
Mike – I don’t think individual fliers will care either. But agencies and corporates will.
This is even faster than “classic” Coke replacing “new” Coke. Here’s hoping for some version of “classic” American, loosely defined as an airline that isn’t the worst operation of the majors and relevant in only 8 cities.
I don’t think this is emphasized enough, but AA has permanently lost market share.
Austin? The garbage fares situation certainly did not improve.
Chicago? Business travellers got a whiff of all those nonstop international flights and never looked back (or should I say connected at LHR) again.
New York? Business travellers aren’t gonna sit in a terminal all day waiting for an AA flight when DL has a superior schedule.
Even in the less competitive smaller and larger AA cities, their performance and yields disappointed. You can fly WN in Dallas or Albuquerque, you can fly the wide variety of foreign carriers at MIA, you can fly through ATL (which has a very competitive schedule) instead of CLT.
All of a sudden not being loyal to AA sounds like a very good idea.
That’s why there was no double digit growth in business travellers, that’s why their stock price has only dipped, not risen (unlike competitors) since Q1 results broke.
Good luck trying to attract those pax back. American Airlines will need it.
I notice that you conveniently left El Paso out of your argument. Checkmate. /s
American forgot the old adage involving “bighting the hand that feeds you.” And now they are learning it the hard way.
Despite seeing the numbers from their side for quite a while – this is the best plAAn they could come up with?! What about a commitment/schedule to make the NDC bookings as functional as the old GDS’ they’ve so bitterly complained about? [after creating and profiting off them mightily for decades]
Of course many will say this doesn’t impact them so why should they care. But usually a company is fairly consistent about their treatment of others – whether it’s their own employees, suppliers as well as customers. And AA has clearly shown that isn’t a priority for them vs the points mill. The degree to which agencies/corporate business have shifted, resulting in this incredibly unusual 180 [more in idea than fact yet], will hopefully translate into them reassessing a myriad number of other issues that do impact nearly everyone they do business with.
There’s always a big gulf between a PR/$ induced release/mea culpa and actual changes in people/system: it’s not what they say now but what they do over time that matters. And they should not be rewarded with more business until they do. Floating one guy off with his golden parachute as if they had no idea what he had been doing for a long time with their [management/board] enthusiastic support is just a distraction.
“Floating one guy off with his golden parachute as if they had no idea what he had been doing for a long time with their [management/board] enthusiastic support is just a distraction.”
It’s more than that, it’s more like C sweet incompetence & they won’t fix it until it effects the bottom line. Problem is, that’s corporate America in a nutshell & we can’t talk about it.
Small detail: I think you meant “CEO Robert Isom” in the opening paragraph.
Whoops, now I get it. Disregard.
Maybe the name of the blog should be changed to the Cranky Travel Agent?
This is about the 20th post about a very niche topic that doesn’t affect the vast majority of the traveling public. We can dissect the guts of the inner working of any number of departments at any number of airlines, but this blog seems to be laser-focused on only one.
I’ve found it interesting, as a traveller and as an agent, and as a former AA employee.
This topic IS affecting anyone who still booked personal travel through a traditional travel agency (for whatever reason, people still do that), and anyone whose job meant work travel was booked through a corporate travel agency (a huge number of bookings). Agencies were having to act differently, and it was affecting the travelling public. Vast majority? Probably not. Significant number? Yes. Had AA not changed course and had another airline followed them in the madness, even more travellers would have been affected.
There are some articles that don’t interest me either, so I skip those, but I still come back the next day.
I’m not in the business, but still find it very interesting and worthwhile to read about. Even if it is such a “niche topic”, I find it to be reflective of the overall health and functioning of AA. As a member of the flying public, I want a decent flying experience, and when I read things like this about AA it makes me hesitant to book with them if I have another choice, even for a few dollars more, and I might go there instead. It is also good to know something about the behind-the-scenes game of different fare classes. So Cranky – keep up the good work informing us.
There’s hundreds of boring blogs written by people with no knowledge. If you’re not interested in reading about something that the author has been following why bother clicking on the article?
Let’s not forget that every airline makes strategic blunders. Look at the ongoing train wreck at Delta with pissing off their loyal fan base. Next year out to be interesting over there
I fear the rath of a certain commenter & his Delta obsession. Oh, what was his name?
Let’s also not forget that companies do things to hope their competitors will follow. AA probably very much would like to have had the rest of the industry follow it – and then the impact would have been negligible.
In contrast, loyalty programs have been undergoing change since they were launched – and every change invariably makes someone unhappy – even as others become more happy.
Companies implement strategies that don’t turn out the way they intend all the time. The difference is how quickly they back off and the damage that has been done.
As has been noted before and AA’s own financial statements compared to its peers show, AA’s decisions have cost AA high value customers and real revenue.
Loyalty program changes at other airlines? Not so much if at all.
Cranky You are blessed with so many smart followers. I was an AA employee 1987-2017
( ramper). I miss the giant anual meetings where Bob Crandal hid his cigarette and spoke to the faithful. I watched buying Air cal and Reno air only to chop them up into little pieces and tossed into the trash. ” A bright future for San Jose”. Fast forward to America West influences…The root of all evil. Tenish years down thr runway… And now here we are. Its just inevitable this foolish management teAW/AAm would fall into thier own quicksand.
As a Travel Advisor (45 years in the business) I have stopped selling American and will probably never sell them again unless demanded by the client or AA is the only choice. I sell Delta or United over AA and never mention AA to the client if UA or DL fit the bill.
*travel agent hat on* (and former Cranky Concierge)
my BIGGEST issue with NDC and what AA has done is my inability to HELP my clients and customers.
What used to take us maybe 30 seconds in Native Sabre, now is not either possible with NDC or we have to call AA, like the rest of you, and endure hold times longer than a presidential campaign.
MY time is valuable. My CLIENTS time is valuable. And all this has done is WASTE thousands of hours of labor that didn’t need to be wasted.
NDC was rolled out too fast, too quickly, and not enough testing. Has anyone else noticed that NO OTHER MAJOR AIRLINE has rolled out NDC since the AA FiAAsco? You have to wonder why? I mean, its NOT like the other airlines saw a SPIKE in ARC sales (US travel agency reporting system). It definitely couldn’t have been.
I can stand behind AA rolling out a new way to do business, FINE. Then at least allow US the tools to remain relevant and HELP our travelers. No one deserves to be put on hold for 8+ hours each time DFW has a weather meltdown when we used to be able to simply rebook our customers and send them on their way. AA’s inAAbility to have an IRROP system like United or Delta is at fault here. AA isn’t and wasn’t ready for the massive increase in workload on not only their airport staff, but also call center. Gutting TA access to fares/schedules in Sabre and other GDSs means an onslaught of an extra 15 to 20% customers NOT getting help from their agents, but now on AA itself.
Outside of NDC, I have lots of reasons to book away from AA – including gutting our totally awesome sales rep (Michael), removing our domestic commissions, and a lose of BusinessExtra. But AA has just gone too far and told us in the travel agent community we don’t matter.
AA tried to treat agencies like they treat their employees… didn’t work too well. AA has a long history of “stick” tactics rather than “carrot” tactics. AA would have been a great national airline for Germany in 1940.
LufthAAnsa
Sorry, I couldn’t resist!
“Sure, but will it play in El Paso?”
Uniformed newbie here. What does this sentence mean?: “And if agencies sell paid seats for travelers, those will also come with paid commissions.”
Does it mean the same thing as “And if agencies sell seats for travelers, those will also come with commissions.”?
What is the meaning of “paid seats”? Is there such a thing as “non-paid seats”? Thanks in advance for the education.
Newbie – That means paid seat assignments, sorry for the confusion. So you can buy a ticket but in some cases if you want a seat assignment with extra legroom or toward the front of the cabin, you have to pay extra for it.