American Airlines CEO Defends Direct Selling Push in Face of Travel Agent Complaints

American Airlines’ multi-year changes to its ticket distribution have had contentious implications for travel agents. The American Society of Travel Advisors in August filed an unfair trade complaint with the U.S. Department of Transportation, accusing American of causing “substantially higher air ticket prices for consumers and frustrated travel management companies.”

American Airlines has made more changes to its distribution strategy than nearly any giant carrier in the world since around 2006.

The essence of American Airlines’ latest phase of changes is that it’s coaxing and prodding travel agents — and the software partners they use — to shift to new workflows and fee structures. But travel agents feel the carrier is using its large market share to push them into adopting processes and payment plans that aren’t in their best interests.

American CEO Robert Isom discussed the direct selling of American Airlines tickets and its added travel products with Skift’s Airline Weekly Editor Edward Russell Wednesday during the Skift Aviation Forum.

“When you shop for American, you ought to be able to shop and get access to everything without having to go through a number of different routes [or sources of information],” Isom said, arguing that its flyers shouldn’t “need a lot of intermediaries to tell them what’s available.”

Airline Distribution Overhaul

American Airlines upgraded its systems in April in its latest multi-year distribution overhaul effort. Roughly speaking, it now offers three paths (to simplify) for booking and re-booking flights and upsells, such as checked bags:

• American Airlines-owned channels, meaning its direct website and app.

• American Airlines-owned and modern retailing channels, such as Expedia, Booking.com, and Hopper.

• Third-party technology used by travel agents and travel management companies and run by the global distribution systems Amadeus, Sabre, Travelport, and TravelSky. These include the new NDC [new distribution capability] technology and process to replace the decades-old communications method known as Electronic Data Interchange for Administration, Commerce and Transport (EDIFACT). 

Travel agents argue that the third-party technology reflects less fare inventory than before, which puts them at a competitive disadvantage in appealing to travelers with access to American’s “direct” offerings.

Earlier this year, American Airlines removed over 40% of its fare inventory from traditional, i.e., non-NDC booking channel, which a majority of travel agents haven’t yet adopted, according to ASTA’s filing.

“Consumers have gained no benefit whatsoever from aggressive price channel discrimination to offset the increased costs,” ASTA wrote. “Travel agencies and travel management companies remain largely
unable to book via NDC-enabled channels due to the industry’s unreadiness and are contractually
prohibited from using aa.com to book their clients on the lower-cost options.”

But Isom said these were momentary glitches in a complex overhaul of a system with many touchpoints.

“Whenever you’re making moves off legacy technologies, there’s always starts and stops,” Isom said. “But as I look out into 2024, I feel comfortable about the platform that we have in place.”

Skift has reached out to ASTA for an update on its complaint. American Airlines has until November 21 to respond to ASTA’s non-competitive complaint.

For more context on American’s changed distribution approach, see this LinkedIn post from last month by consultant Cory Garner, the former head of distribution at the carrier.

Claimed Traveler Benefits

Isom argued that American Airlines’s changed distribution platform will benefit travelers because there will be more consistency in the information they get about their flight and their ease of rebooking in case of delays and cancellations regardless of whether a corporate travel agent booked the ticket for them or if they booked directly or through an online travel agency themselves.

Today, information isn’t evenly shared simultaneously across all channels. Travel agents represented by ASTA have complained that the processes for handling ticket changes, either due to a flyer’s changed travel plans or a flight disruption, are clunky and not cost-effective for agents.

“Whenever you’re making moves off of legacy technologies, there’s always starts and stops,” Isom said. “But as I look out in 2024, I feel really comfortable about the platform that we have in place.”

“Everyone wants to talk about NDC [the new distribution capability] and, you know, changes to the distribution program, but I think really it’s just a question of what do customers want?” Isom said.

“You shouldn’t have to go and wait in a queue at an airport or on a phone to get what is just something that’s not magic. It’s information that you could easily have, and it’s just quicker,” said Isom. “Ultimately, it’s a really efficient way to run the airline as well.”