American Airlines has ruled out delaying the removal of 40 percent of its airfares from traditional retail channels next month.
That’s despite lobbying by the American Society of Travel Advisors, which asked the carrier to push back its move date of April 3 to the end of the year.
The society, which represents 160,000 travel agency workers, wrote to the carrier on March 8, arguing that holding such a substantial portion of its fares from “critical independent distribution channels” will have a negative impact on corporate travelers.
With just two weeks to go, a spokesperson at American Airlines told Skift on Thursday that it was still a categorical “no.”
In its letter, Zane Kerby, president and CEO of the American Society of Travel Advisors, said the “sudden bullying of valuable distribution partners into breakneck-speed implementation won’t serve our shared customers.”
The society claims many corporate travel agencies, global distribution systems (namely Amadeus, Saber, and Travelport) and third-party booking technology partners, including Concur, have stated they will not be prepared to facilitate New Distribution Capability implementation by April.
New Distribution Capability is a controversial technology standard developed by the International Air Transport Association. The idea is to give airlines more control over their airfares, rather than relying on global distribution systems.
“Without significant and key front, mid and back-office travel fulfillment systems ready and able to fully process New Distribution Capability transactions, significant disruptions to shopping and bookings, including ticketing, refunds and re-ticketing are inevitable,” the letter said.
American Airlines told Skift that it disagreed. “This is wrong. There are front, mid, and back office technology updates that need to be completed as everyone needs to invest in improving the customer experience,” said a spokesperson.
“American has spent the last 10+ years investing in its modern retailing technology and several travel sellers, technology aggregators and third-party corporate booking tools have also done the same. Currently, one out of every three travel agencies issued tickets for American comes through our New Distribution Capability technology,” they added.
During those 10 years there has also been a convoluted history of surcharges and fees. Some airlines feel they are paying too much commission to the global distribution system, so they encourage direct bookings by penalizing bookings made through the likes of Amadeus, Saber, and Travelport. For example, Germany’s Lufthansa in 2020 boosted the surcharge on tickets bought outside of its own channels to a $21 fee in the US
Global distribution systems also share part of what they receive from airlines with the travel agency that made the booking.
As a result, New Distribution Capability to some extent disrupts business models. While in American Airlines’ case the three global distribution systems state they’re ready to adapt the new airlines, travel buyers and corporate travel agencies may prefer to work more directly with airlines in the future, as Lufthansa has done with Siemens.
An Unhappy Marriage
Flight Center Travel Group, which runs the corporate divisions of FCM Travel and Corporate Traveler, is one such agency that stands to be impacted by the April 3 switch.
“We’re not opposed to New Distribution Capability. We’ve made some investment in TP Connects to ensure we have access to all the new content. The concern is with respect to the timelines being enforced,” said Marc Casto, president of leisure, Americas, Flight Center Travel Group — and executive vice president, communications and government affairs, of the American Society of Travel Advisors.
“They’ve been signaling for a decade, but only released the plan of attack in the past six months,” he added. “Saying you’re going to get married, and actually setting the date, are two different things.”
The society insists there will be wide-ranging umbrella effects on the corporate travel buyer’s needs, which could also affect duty of care, policy compliance, insurance, pre-trip approvals and even the organization’s own insurance.
“All of us saw what happened in December with the weather delays,” said Jay Ellenby, president of Safe Harbors Business Travel Group. “By making it more convoluted and more complex to service customers is going to result in a significant reduction in service capacity and quality. And particularly for ourselves, we have to contact call centers, which are already oversubscribed.”
Bookings are continuing to pick up. In the US, travel agency air ticket sales reached $8.4 billion in February, which is a 54 percent year-over-year increase on February 2022, according to Airlines Reporting Corporation.
In the UK, travel buyers at the Institute of Travel Management are worried they will soon face a deluge of complaints from travelers about fares being visible but not bookable in their online booking tool.
They also predict a potential increase in leakage (where bookings are made outside of recommended booking tools) and expressed frustration at the lack of readiness by agencies, the booking tools and global distribution systems given the length of time that New Distribution Capability has been underway, based on feedback from a “Buyer Knowledge Exchange session” that took place earlier this week.
“Buyer members are feeling battered by the challenges of air content and lack of readiness for New Distribution Capability,” said Scott Davies, CEO of the institute. “Many have described it as a ‘mess.’”
A Reasonable Request
There are hopes that American Airlines will meet the American Society of Travel Advisors half way by rolling out the new airfares in stages.
“It’s probably not going to happen by April 1, at least not all 40 percent moving at once,” said Steve Reynolds, CEO of audit and booking platform TripBam, in its March snapshot report.
Flight Centre’s Casto said the society’s request was “reasonable” and its arguments a “fair assessment” on all sides of the industry.
In the meantime, expect more back-and-forth arguments over the next two weeks, arguments that will be near-impossible to tell if factually correct due to the many commercial interests at stake.
UPDATE: An earlier version of this news article described Marc Casto as chair of the American Society of Travel Advisors.