New American Airlines Strategy Leaves Agencies With Dramatically Higher Airfares

25.08.2023 - 13:52 / skift.com / Matthew Parsons / Sarosh Waghmar / Airlines

Corporate travel agencies are now seeing wide discrepancies in airfares after American Airlines overhauled its ticket distribution strategy.

On April 3, the carrier moved 40 percent of its airfares to its “owned channel” (AA.com) as well as New Distribution Capability-enabled channels, and in the process stopping their sale through what it calls third-party legacy technology platforms (that use decades-old EDIFACT technology.) This includes EDIFACT technology and communications through global distribution systems, which most corporate travel agencies use.

However, all three major global distribution systems (Amadeus, Sabre and Travelport) can also now provide access to American Airlines’ New Distribution Capability-enabled fares. Sabre was the last one to join the party, just about, on March 29.

While in Europe several major airlines have already aggressively pushed their direct retailing strategies, American Airlines is the first carrier in the U.S. to move ahead, perhaps reflecting its acknowledgement of fewer pure business trips being flown.

And back in September, American Airlines said that its lower fares would no longer be available through third-party legacy technology channels.

Corporate travel agency AmTrav said 35 percent of its itineraries had “lower fares in New Distribution Capability,” with average savings of $164 on those itineraries. For 13 percent of itineraries, the company was finding savings of more than $100, said CEO Jeff Klee in a LinkedIn post on Wednesday

Another agency, DCM Elite Travel Planners, based in Baton Rouge, Louisiana, has also seen big gaps.

It cited flight AA2911 from New York to Chicago as an example. It said only one fare level, Main cabin, was accessible in the “legacy Sabre global distribution system.” Prices were roughly the same across all channels. But First and Flexible fare differences were “dramatic,” the agency said.

First fares were $304 for the Sabre New Distribution Capability ticket, $305 through AA.com, and $483 through the EDIFACT Sabre channel.

Main Flexible fares were 103 percent more expensive in the standard Sabre global distribution system fare, compared to the Sabre New Distribution Capability ticket.

First tickets were 59 percent more expensive, and First Flexible 39 percent more expensive.

The lower fares that can be booked via AA.com or through New Distribution Capability are seen by some agencies as an incentive to encourage more bookings though the channel.

“Whether American’s New Distribution Capability fares remain at a discount to EDIFACT-based fares or level out over time, the bigger opportunities with New Distribution Capability are personalization and a better traveler experience,” said Sarosh Waghmar, founder and CEO of Spotnana.