DALLAS — The mood at ASTA's travel advisor conference in Dallas was upbeat on the first day when news broke that American Airlines was shifting its distribution strategy in a way that the industry had fiercely opposed, giving ASTA a hard-fought victory after a year-long battle.
The news has elicited a collective sigh of relief from the agency industry, but it remains to be seen what will happen next.
American Airlines CEO Robert Isom has abandoned plans to cut points for bookings made through non-preferred travel agents and said it would stop removing content from its GDSs, but many questions remain, from attrition to the airline's agent sales team to trust in its advisor community.
Dave Hershberger, president of Prestige Travel Leaders in Cincinnati, said American Airlines has “a lot of ground to make up” with travel companies.
“Last year, American pulled corporate contracts, they fired salespeople, they cut agency fees, and I think they need to act quickly to reverse that,” Hershberger said. “There's a lot of bad blood against American, but I think they can mitigate that by acting quickly and pivoting.”
A look back at how this all began
ASTA's protracted battle with American Airlines began more than a year ago, when American pulled nearly half of its fares from traditional GDS channels and made them bookable only through NDC channels. But the association argued that American's NDC technology, particularly its service capabilities, was inadequate, making NDC bookings cumbersome for travel agents.
The rift widened further earlier this year when American Airlines announced that only “preferred” airlines, as determined by NDC booking share, would earn AAdvantage points and miles for customers' bookings.
Hershberger, whose company makes about 65% of its sales from corporate sources, called American's strategy “one of the biggest disruptions we've faced in a long time.” He said the NDC technology simply wasn't up to par.
The possibility of not being a preferred agent for airlines makes the situation even worse: corporate clients and travelers want frequent flyer points.
Jay Ellenby, president of Safe Harbors Business Travel in Belcamp, Maryland, agreed that NDC technology hasn't evolved enough.
“The problems arose once we were able to acquire these transactions and then had to manage them or change them,” Ellenby said. “It caused a lot of uncertainty and was very costly just to process that.”
Olga Lamoud, senior vice president of Florida and Latin America for Gray Dawes/Express Travel in Coral Gables, Fla., said American Airlines' policies have caused her advisers to put in extra effort serving clients, and they've also impacted her relationship with the airline, especially when it announced restrictions on miles and points.
“AA thought customers would bypass the TMCs and buy direct, but I think that backfired,” Lamoud said. “Customers were very vocal in not supporting the initiative.”
How AA Moves Forward
Much of the uproar is the result of a campaign spearheaded by ASTA against American Airlines' policies, which CEO Zane Kirby credits with leading to a change in policy.
Travel agents and their customers sent thousands of messages to lawmakers through the grassroots portal. Messages from travelers were in support of agents and the idea that people should be able to earn miles and points no matter where they book.
Agents, meanwhile, said they were struggling, with some saying they feared they could face multiple layoffs as a result of the loss of business. Advisers also expressed concern that American's success could encourage other airlines to follow suit.
Advisers said the damage has already been done and that American will need to not only address its future NDC strategy and downsize its sales and support teams, but also rebuild relationships with a neglected travel agent community.
“If they take this seriously and move forward in a way that we believe in, I think they'll get the support they need,” Hershberger said. “We need them. They're too big to ignore.”
Ellenby worries that third-party technology providers, such as GDSs, will slow down the development of NDC solutions without the pressure of a strategy like American Airlines'.
“Looking back over the past year, the progress that many third-party companies have made, including the GDSs,” Ellenby says, “has been phenomenal. My concern is that they're taking their foot off the gas.”
