DALLAS — The mood at ASTA’s Travel Advisor Conference here was buoyant when, during Day 1, the news trickled in that American Airlines would reverse course on its distribution strategy that the trade vehemently opposed, providing a hard-fought victory to ASTA after a yearlong battle.
And while that news was met with a collective sigh of relief from the agency community, what exactly lies ahead is still murky.
American CEO Robert Isom said the carrier would abandon plans to not award loyalty points for bookings from travel agencies that don’t qualify as preferred and to stop removing content from the GDSs. But many questions still linger, from the carrier’s depleted agency sales team to goodwill among the advisor community and beyond.
Dave Hershberger, president of Prestige Travel Leaders in Cincinnati, said American has “a lot of ground to make up” with agencies.
“Over the last year they’ve pulled corporate contracts, they’ve pulled salespeople, they’ve pulled agency commissions, and I think they need to move fast to restore that,” Hershberger said. “There’s a lot of ill will against American, and I think they could do a lot to alleviate that by moving fast, making an about-turn.”
Looking back on how all this started
ASTA’s protracted battle with American began more than a year ago when the carrier pulled nearly half of its fares from traditional GDS channels, making them available for booking only via NDC channels. But the Society maintained that American’s NDC technology was not good enough, especially its servicing capabilities, making NDC bookings onerous for agencies.
The rift widened further earlier this year, when American said only “preferred” agencies — determined by share of NDC bookings — would be able to accrue AAdvantage points and miles for clients’ bookings.
Hershberger, whose agency’s sales are approximately 65% corporate, called American’s strategy “one of the biggest disruptions that we have faced in a long time.” The NDC technology simply wasn’t up to snuff, he said.
That was compounded by the possibility of not being a preferred agency with the carrier: Corporate customers and travelers want frequent flyer points.
Jay Ellenby, president of Safe Harbors Business Travel in Belcamp, Md., agreed that the NDC technology had not evolved enough.
“Once we’re able to acquire those transactions, when they had to be managed, changed, anything like that, that’s when issues arose,” Ellenby said. “It caused quite a bit of anxiety, and it was very costly just servicing them.”
Olga Ramudo, senior vice president of Florida and Latin America for Gray Dawes/Express Travel in Coral Gables, Fla., said American’s policies gave advisors at her agency extra work trying to service customers. It also affected the agency’s relationship with the carrier, especially when it announced its restrictions regarding miles and points.
“I believe that AA thought the customer would go direct, bypassing the TMCs, and that backfired on them,” Ramudo said. “Customers spoke loud and clear by not supporting this initiative.”
How AA moves forward
Much of that noise came as a result of a campaign ASTA spearheaded against American’s policies, which CEO Zane Kerby credited with leading to the reversal.
Travel agencies and their clients sent thousands of messages to legislators via its grassroots portal. Messages from travelers were supportive of their agents and the idea that they should get miles and points no matter where they booked.
Agencies, meanwhile, told of their troubles, with some saying they were in danger of cutting multiple jobs as a result of lost business. Advisors also expressed concerns that other airlines might follow suit if American was successful.
Advisors said damage has been done and that in addition to addressing what its NDC strategy will look like going forward, as well as its reduced sales and support teams, American will have to rebuild relationships with a slighted travel agency community.
“I think if they’re sincere about it and they take this seriously, they move forward in a way that we can believe, I think they’ll get the support that they need,” Hershberger said. “We need them. They’re too big to disregard.”
Ellenby has concerns that third-party technology providers, such as the GDSs, will now slow the development of NDC solutions without the pressure caused by a strategy like American’s.
“If you look at the past year and the progress that was made by many third-party companies, including GDSs, it was significant,” Ellenby said. “It was tremendous. My fear is that they’re going to take the foot off the pedal.”
