Change Take
— Matthew Parsons
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 has asked the carrier to push back its April 3 move date until the end of the year.
The society, which represents 160,000 travel agency workers, wrote to the carrier on March 8, arguing that withholding such a significant portion of its fares from “critically independent distribution channels” would have a negative impact on corporate travelers.
With just two weeks to go, an American Airlines spokesperson told Skift Thursday that it’s still a resounding no.
Allegation of harassment
In his letter, Zane Kerby, president and CEO of the American Society of Travel Counselors, said “suddenly harassing valued distribution partners in a breakneck speed rollout will not serve our common customers.”
The company claims that many corporate travel agencies, global distribution systems (namely Amadeus, Saber and Travelport) and third-party booking technology partners, including Concur, have indicated that they will not be ready to facilitate the implementation of new distribution capabilities until 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, middle and back-office travel fulfillment systems ready and able to fully process transactions with new distribution capabilities, significant disruption to shopping and booking, including ticketing, refunding and reissuing tickets, are unavoidable,” the letter said.
American Airlines told Skift they disagree. “This is incorrect. There are updates to front, middle and back office technology that need to be completed as everyone needs to invest in improving the customer experience,” a spokesperson said.
“American has spent the last 10+ years investing in its advanced retail technology, and several third-party travel sellers, technology aggregators and corporate booking tools have done the same. Currently, one in three travel agencies issued by American Tickets comes through our technology for new distribution opportunities,” they added.
There was also a complicated history of surcharges and fees during those 10 years. Some airlines feel they pay too much commission to global distribution systems, so encourage direct bookings by penalizing bookings made through Amadeus, Saber and Travelport. For example, Germany’s Lufthansa in 2020 raised the surcharge on tickets purchased outside its own channels to a $21 fee in the US
Global distribution systems also share some of what they receive from airlines with the travel agency that made the booking.
As a result, the New Distribution Capability disrupts business models to some extent. While in the case of American Airlines, the three global distribution systems say they are ready to accommodate the new airfares, travel buyers and corporate travel agencies may prefer to work more directly with airlines in the future, as Lufthansa did with Siemens.
An unhappy marriage
Flight Center Travel Group, which operates the corporate divisions FCM Travel and Corporate Traveler, is one such agency that will be affected by the change on April 3.
“We are not opposed to new distribution opportunities. We’ve made some investment in TP Connects to make sure we have access to all the new content. The concern is about the time frames that apply,” said Mark Casto, president of leisure, Americas, Flight Center Travel Group – and president of the American Society of Travel Advisors.
“They have been signaling for a decade, but only released the plan of attack in the last six months,” he added. “Saying you’re going to get married and actually setting the date are two different things.”
The society insists it will have far-reaching umbrella effects on the needs of corporate travel buyers, which could also affect duty of care, compliance, insurance, pre-travel approvals and even the organisation’s own insurance.
“We all saw what happened in December with the weather delays,” said Jay Allenby, president of Safe Harbors Business Travel Group. “As customer service becomes more and more complex, this will lead to a significant reduction in capacity and quality of service. And especially for ourselves, we have to reach out to call centers that are already overburdened.”
Reservations continue to be collected. U.S. travel agency air ticket sales reached $8.4 billion in February, up 54 percent year over year from February 2022, according to the Airlines Reporting Corporation.
In the UK, travel buyers at the Institute of Travel Management are worried they will soon face a flood of complaints from travelers about prices being seen but not bookable in their online booking tool.
They also predicted a potential increase in leakage (where bookings are made outside of the recommended booking tools) and expressed frustration at the lack of readiness on the part of agencies, booking tools and global distribution systems given the length of time that the new distribution capability is underway, based on feedback from a “buyer knowledge sharing session” held earlier this week.
“Member buyers feel battered by on-air content challenges and a lack of readiness for new distribution opportunities,” said Scott Davis, the institute’s CEO. “Many described it as a ‘mess’.”
A reasonable request
There are hopes that American Airlines will meet the American Society of Travel Advisors halfway by rolling out the new airfares in stages.
“It probably won’t happen until April 1, at least not all 40 percent move at once,” said Steve Reynolds, CEO of audit and booking platform TripBam, in his March snapshot report.
Flight Center’s Casto said the public’s request was “reasonable” and its arguments represented a “fair assessment” from all sides of the industry.
Meanwhile, expect more back-and-forth over the next two weeks, arguments that will be nearly impossible to determine if they are factually correct due to the many commercial interests at stake.
Photo: Travel agency air ticket sales hit $8.4 billion in February 2023.