Here's Why American Airlines Is Revolutionising Corporate Travel Booking

 

There is a lot of talk about American Airlines' intention to reserve 40% of its tickets, mostly for business travel, for so-called New Distribution Capability-powered channels and direct channels, including its own website, with only one month left to go.

Recap: The International Air Transport Association created the technical standard known as New Distribution Capability. Instead of relying on worldwide distribution channels, the goal is to offer airlines more control over their airfares.

Historically, these global distribution systems (namely Sabre, Amadeus, and Travelport) have served as middlemen, transmitting airline data used by travel brokers and other merchants to offer customers booking services.

Since April, American has stopped using the global distribution systems' Edifact (Electronic Data Interchange for Administration, Commerce, and Transport) protocol, which predates the internet and is used to transfer around 40% of its material. It presently dominates the industry's use of third-party distribution.

Whatever an airline sells or offers is referred to as content, including tickets, ancillaries like seats and luggage, perks from frequent flyer programmes, and order management-related items like adjustments or cancellations (according to tech company Duffel). American's cheapest fares will probably be included in this content.

With Sabre going online in April, Amadeus and Travelport have created methods for handling New Distribution Capability information from American. Although American claimed to have signed contracts with each of them in October of last year, they are all ready. Via linkages with the New Distribution Capability, they will "provide travel merchants and corporate customers the airline's greatest content in 2023."

Airlines claim that by using this strategy, they can provide their goods and services to a wider audience. According to American Airlines, "in the past, customers who booked travel through third-party distribution partners may have had below-par booking and travel management experiences with restricted access to rates and packages."

In the instance of American, it claimed that corporate clients and travel shops receive improved services, such as Main Plus, Main Select, and Flagship Business Plus tickets, carbon offsets through Cool Impact, and day-of-flight extras including seat selection, upgrade options, and pre-ordered meals.

Qui benefits from this? Let's divide it into four categories.

What alters for the traveller? Not much this year. Personalization is the name of the game, so customers may start to notice more chances to combine services, like WiFi and a seat upgrade. Due to American Airlines paying less to distribute its fares directly, prices may also be lower.

Gavin Smith, director of Element Travel Technology, noted that most, if not all, travellers don't care about new distribution capabilities; instead, they just worry about acquiring a fare that is consistent with their own or their employer's price elasticity and policy. "I have not observed any significant advantages for passengers from deals or bundles. In the future, corporates might have the opportunity to develop these.

the view of the company's travel manager. The April transition will have a range of effects on travel management. The impact on fare tracking may be the biggest. Will businesses be able to monitor their spending once the new technologies are in place? How do they weigh their spending on American against that of a less profitable airline?

For the Japanese IT firm NTT, Lisa Reilly, head of global sourcing for travel, has many inquiries.

How does that affect your existing contacts? Can you book on codeshare flights so that you can still access those lower tickets, she asked? How do you plan to resolve that? During a recent webinar presented by travel and cost platform Itilite, she said, "Will you have visibility into what you're utilising right now in those lower (pricing) buckets, so come April you can see what the difference is? " "At this point, you might want to think twice about buying packages. Do you want me to show bundles? Do I want to pay for WiFi and baggage separately or together?

Since 2021, American Airlines has collaborated with its large corporate clients to provide custom product offerings that are tailored to specific groups of its employees, such as senior managers.

What effect does it have on business travel agencies? The key benefit is that consumers now have access to additional product information and content that was previously only accessible through the airline's direct channel. That includes any less expensive airfares.

The new method of retailing also provides agencies with a standardised settlement experience, according to Airlines Reporting Company, which collaborates with Sabre. Paige Blunt, director of New Distribution Capabilities, claimed that this will enable travel firms to provide greater information to their clients.

Nonetheless, the agency will be the most unhappy party in this situation because it will result in higher expenses and more complexity. These organisations are in charge of making sure that passengers can not only book the fare but also adjust it if necessary. This process is known as "servicing" in the industry.

The travel management businesses are being forced to shift, albeit very slowly, as more large carriers seek new kinds of distribution, according to Smith. "Agencies must offer actual innovation to their clients. The sector, our clients, or the suppliers are not helped by the pushback we are seeing.

The next-generation distribution network Kyte, which links airlines and travel merchants, was founded and is led by Alice Ferrari. "The arduous process of connecting to and maintaining these connections with an airline's NDC APIs is quite expensive and resource-intensive, she claimed. "Thus far, the New Distribution Capability hasn't really resulted in any obvious advantages for travel agencies, other than perhaps the potential for sellers to directly negotiate better prices with the airlines, strengthening their partnerships,"

American Airlines is apparently establishing a specialised "special servicing desk" to assist agencies. "We expect our travel agency partners to provide servicing to our consumers who transact through indirect channels through modern retailing," a spokeswoman for the airline said.