It is no secret that American wants everyone to book directly with the airline. It has said that travelers prefer the direct booking experience better, but it has begrudgingly allowed travel agents to continue selling tickets at the same fares as long as they adopt the newer NDC standard. Since it was going to allow agency bookings to continue, it tried to benefit by paying lip service to the idea that travelers should be able to book where they want to book. Last week’s news that American will no longer allow non-preferred travel agency bookings to earn miles shows that American is done pretending that’s the case.
Over the last couple of years, American has made a big push to get travel agents to go away from the traditional EDIFACT way of booking airline travel and instead use NDC. I don’t need to rehash this in detail, but you can certainly read previous posts — like this one — on the subject if you need to catch up.
The basic idea is this… NDC takes control away from the agency and puts it in American’s hands, making for a more consistent product offering that’s easier for the airline to service if needed. It also allows the airline to provide more options to travelers when selling in the first place. The flip side of that is that it makes it harder for competent travel agents to actually help their customers with changes and problems, because the standard has not been built out well enough yet.
There’s no question that this is where the industry is going, and if the airlines want it to go that way, so be it. My biggest quibble with American has been that the airline forced adoption of the technology by removing 40 percent of fares from EDIFACT systems before NDC systems were ready.
Traditional distribution systems like Sabre are woefully unprepared, though they do have some semblance of an ability to book using NDC. We’ve been actively using Sabre at Cranky Concierge to book NDC when options aren’t available in EDIFACT, and our agents continue to be frustrated on a regular basis. The airlines are trying to regularly improve NDC functionality, and because of that, Sabre will probably never catch up. That leaves agencies forced to look for more functional solutions, but the industry spent so many years fighting NDC that the good options are few and far between at this point.
American certainly woke the industry up when it removed 40 percent of fares, but it did stay true to the idea that it would let travelers book where they want. If an agency didn’t want to (or couldn’t) use NDC, fares might be higher, but travelers could make that decision. In some cases at Cranky Concierge, we’ve seen travelers pay more just knowing that we could actively fix problems in our system and not have to talk to American, something that isn’t realistic for an NDC booking today in most systems (yes, Sabre included).
This becomes harder to do starting on May 1 when fares booked outside of American or a “preferred” travel agent will no longer earn miles in the AAdvantage program for travelers. To be very clear, even if a non-preferred agent books a fare using NDC as American wants them to… tickets still won’t earn miles.
This goes directly against the idea that travelers can book travel where they want to book it. It also unfairly penalizes smaller agencies and will only spur more consolidation. Why? Well let’s look at what it takes to be a preferred agency.
Must have a commission agreement with American Must book an increasingly higher percent of bookings using NDC:
“A new product attribute of American’s offers is the ability to earn AAdvantage® miles. For an agency to be considered preferred, they must demonstrate their ability to clearly communicate to customers when they earn AAdvantage® miles in the online booking tool throughout the booking flow before a purchase is finalized.”Smaller agencies don’t tend to have commission agreements on their own. That’s especially true since American gutted its sales team and doesn’t have the bandwidth to deal with smaller agencies. So, agencies either need to find a larger host agency that is preferred or just decide they can survive selling tickets that do not earn miles. Neither option is ideal.
Many of the big host agencies have been slow to adopt NDC and offer functional tools, but they do have the commission agreements. It’s now a tradeoff for an agency when it comes to deciding whether to pursue the commission agreement or better technology. Now American says you have to have both.
This makes it easy for the likes of Expedia and other online travel agents that already largely use NDC to be preferred since they don’t care about actually servicing bookings after the fact. It’s the agencies that actually provide a higher level of service that are punished here, and that makes no sense.
Even worse, American hasn’t released a list of who will qualify as a preferred agency, nor will it do that until April. By going with this strategy, it has been able to sew doubt into the minds of travelers. American emailed its AAdvantage members about this, so most of them have gone straight to their agencies to see if they’d be preferred. We’ve had multiple inquiries at Cranky Concierge, and all we can say is “we don’t know, but if not, we’ll find a new host agency that is”
The reality here is pretty clear. American does not want you to book through travel agents, and it doesn’t really have a good reason. This is a very strange and unique stance that differs from nearly every other airline, even Southwest.
Many airlines have complained about the costs of booking through travel agent systems, but their solution hasn’t been to ban it but rather put a surcharge on tickets booked through those channels. I still think that’s misguided, but it does at least preserve choice.
Then there’s what United has done, using more advanced internal systems to create what it calls “continuous pricing.” This can’t be supported in EDIFACT for technological reasons, so United has said it will leave everything in EDIFACT (except Basic Economy) and then offer NDC connections to agencies so they can book the cheaper fares. I understand this as well.
American has none of this. It continues to file its fares the same way. It just blocks many of them from being sold through traditional channels. And now it won’t allow anything to earn miles if the agency itself isn’t bowing down to do what American says even if it goes against what the customer wants. American is just being punitive against those agencies who are trying to provide a higher level of service to customers. This whole thing is backwards.
The rules on how an agency can become preferred are squishy and vague. That’s clearly by design. This is a way for American to either force NDC adoption or banish agencies from booking American tickets. Even the metrics are squishy, so American can really just play the role of kingmaker. The agencies it likes will be fine. The others will not. It’s a war that shouldn’t be happening, because there’s no good reason for it. Yet American continues to march ahead….
