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01.08.2024 - 16:33 / skift.com / Eva Air / Willie Walsh / Justin Dawes
Since American Airlines abandoned its adoption of a next-generation distribution strategy this year, that left some wondering if other airlines may follow suit.
Decius Valmorbida, president of travel for Amadeus — one of the companies providing the tech to help American and other airlines adopt these new strategies — is not worried about the repercussions of the American Airlines retreat.
“I find that it’s going to be a very small impact within the quarter because the overall trend is of adoption,” Valmorbida said Wednesday during an earnings call. “And we’re going to see that continue in the quarters to come independent of American Airlines.”
American Airlines had been transitioning to a strategy focused on direct bookings along with what the industry calls the new distribution capability (NDC), new tech that improves connectivity to travel sellers and better enables personalized offers.
The traditional method for connecting to travel sellers is through the decades-old global distribution systems, which is the primary business for Amadeus and its competitors.
The airline industry has a long-term plan to adopt NDC, but American Airlines was among the first to make such a strong commitment, until it backtracked for what the CEO said was poor execution.
But, Amadeus has now signed 60 airlines — mostly recently Tunisair, Eva Air, and Vueling — to its NDC business. And bookings through that tech are increasing, Valmorbida said, though they still account for a very small portion of overall bookings.
“This is very much neutral for us in terms of business model. It is a question of adoption. The adoption of NDC goes depending on the commercial strategy of the airline,” Valmorbida said. “Those things change over time. We have just seen American Airlines that was putting a lot of emphasis on NDC adoption and now they are taking a little bit of that emphasis out.”
The plan had been that the airline would provide exclusive benefits, like ability to earn loyalty points, to agencies that purchased flights through one of its preferred channels. Now, American is working to repair relationships with travel agencies and correct what could be a $1.5 billion mistake.
Willie Walsh, head of IATA, the organization behind the industry’s planned transition to NDC, told Skift that the principles behind the change remain valid. “I don’t think there will be many [airlines] looking at what American did. I think there will be lots of airlines looking at those that have made it successful.”
There were a few issues that negatively impacted bookings for Amadeus, including the bankruptcy of European tour operator FTI Group and increased direct connections in North America between an online travel agency and some airlines.
Still,
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