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American Airlines has decided to rethink its strategy of tying loyalty points in its AAdvantage program to New Distribution Capability (NDC) bookings.
This shift comes after CEO Robert Isom acknowledged at the Bernstein Strategic Decisions Conference that the airline's rapid implementation of its NDC ticket sales strategy contributed to disappointing second-quarter numbers.
American Airlines experienced a decline in bookings due to the hastily implemented sales and distribution strategy. Isom admitted that the airline needs to re-evaluate its distribution strategy comprehensively to address this issue.
He emphasized the importance of modern retailing and internet-based channels for the future of airline distribution but recognized that the company's swift transition to NDC was poorly executed.
Although the specifics of the new strategy were not detailed, Isom highlighted the airline's commitment to adapting its approach to regain customers lost since the change was announced in February.
Additionally, American Airlines announced that Vasu Raja, its executive vice president and Chief Commercial Officer (CCO), would step down from his role in June. A search for his replacement, led by Stephen Johnson, the vice chair and chief strategy officer, is underway.
What This Means for Travelers
For travelers, this shift means that American Airlines is re-evaluating how it manages loyalty points and ticket sales. The initial strategy to tie AAdvantage points to NDC bookings aimed to modernize the sales process and utilize internet-based channels. However, the rapid implementation caused disruptions and dissatisfaction among customers and travel agencies.
As American Airlines works on a new approach, travelers can expect the airline to focus on more balanced and thoughtful integration of modern distribution methods.
This reassessment aims to enhance the booking experience and ensure that loyalty points are easily accessible, regardless of how tickets are purchased.
Impact on Travel Agencies
The travel agency community played a significant role in American Airlines' decision to pull back on its NDC strategy.
The rapid pace of the initial move was a major concern for the American Society of Travel Advisors (ASTA), which opposed the change. Travel advisors are essential in facilitating air travel, and their advocacy helped highlight the challenges posed by the initial strategy.
With the new strategy, travel agencies can expect better communication and collaboration with American Airlines.
The airline's willingness to re-evaluate its approach indicates an understanding of the critical role that travel advisors play in the distribution channel. This collaboration will likely lead to a more integrated and mutually beneficial relationship between airlines and travel agencies.
Looking Ahead
American Airlines has not yet detailed its revised strategy, but the airline is committed to being attentive to the marketplace and optimizing its approach for customers.
ASTA has expressed openness to working with American to develop a sales strategy that incorporates NDC while considering the interests of travel agencies.
This development highlights the dynamic nature of airline distribution and the importance of collaboration between airlines and travel agencies.
As American Airlines refines its strategy, the focus will be on creating a seamless and customer-friendly booking experience. The travel agency community will continue to play a vital role in ensuring customer satisfaction and facilitating air travel in this evolving industry.
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