American Airlines 'Constructive' on Summer Travel Demand

25.08.2023 - 13:44 / skift.com / Delta Air Lines / Vasu Raja / Robert Isom / United Airlines / Edward Russell / Airlines

The rise in blended travel is reshaping American Airlines. Travelers who combine work and leisure into one trip are not only the fastest growing segment of the carrier’s business, but they are also driving changes to everything from how it sells flights to its loyalty program and big investment in premium seats.

The Fort Worth, Texas-based carrier’s dramatic introduction of new so-called New Distribution Capability direct booking channels earlier this year is, in part, a response to blended travelers’ demand for more control and flexibility over their own travel. Those same travelers are driving a significant increase in membership to American’s loyalty program, AAdvantage, and new sign ups to its lucrative co-branded credit card agreements. In the first quarter, the airline recorded 60 percent more new AAdvantage accounts than four years earlier.

“The more that we can give [customers] a contemporary retailing experience, like what they get [with] anything else they buy, the more value,” American Chief Commercial Officer Vasu Raja said during a first-quarter earnings call Thursday.

Blended travel — when travelers tack on vacation to their business trips — has taken about 15 percentage points of share, for a total of about 35 percent of all bookings at American, from pure corporate travel, he said. And that shift is significantly more lucrative for the airline: “The blended yields we see coming in are 8-10 percent higher than the very business trips they replace.” Yields are essentially a proxy for airfares.

Not everyone is happy with American’s shift to the New Distribution Capability or more direct sales. Travel agencies not using those American channels have said they are seeing significantly higher fares for the same flights on the airline than before the switch that occurred in April. However, that could be chalked up to the as-yet incomplete rollout of the new New Distribution Capability system, or travel agencies failing to adopt to the new technology required.

Raja said Thursday that more “selling and servicing tools” will be available to agents through the summer.

But, in the end, American may care less and less what travel agents say. According to Raja, only 10 percent of revenue came through agency channels in the first quarter — a share that is shrinking as more travelers book directly, particularly through American’s website and app.

“The marketplace has changed,” American CEO Robert Isom said of corporate travel.

International longhaul travel is in the midst of the surge in pent-up demand that American and other U.S. airlines saw domestically last year. As such, American is focused on recovering its longhaul network in the second quarter. Capacity in longhaul markets, for example to