The latest attempt by American Airlines to disintermediate the retail travel community came down this week via an announcement from the airline that, as of May 1, it will stop awarding loyalty points to passengers who are booking through what American calls “non-preferred” agencies. Those non-preferred agencies are the ones that have not adopted American’s NDC, or “New Distribution Capability.” The airline also pulled 40 percent of its inventory away from agencies that are not plugged into the NDC.
The move comes a year after American deployed the NDC and tried to push agencies to adopt it, when it was not yet fully developed and still had a lot of bugs, according to ASTA President Zane Kirby.
According to a statement issued by ASTA, “Last April, AA forced an underdeveloped technology onto channel ‘partners.’ Nearly a year after its self-imposed NDC launch date, problems associated with basic servicing functions such as comparative shopping, split tickets, limitations on cancellations, booking multiple people on the same itinerary, and rebooking remain, creating extraordinary challenges for agencies and their travelers as they attempt to distribute American Airlines’ services to the traveling public.”
ASTA filed a lengthy formal complaint with the Department of Transportation (DOT) alleging unfair practices in American’s implementation of the NDC, including its pulling away 40 percent of its inventory from non-NDC channels.
The complaint cuts to the core of airline deregulation issues that are heating up again over an airline industry dominated by four major carriers that exercise monopolistic powers over their respective territories, and a rising wave of consumer dissatisfaction over airlines services, which seems to have fallen on deaf ears for decades.
The ASTA complaint goes into depth about issues that date back to the Airline Deregulation Act of 1978. Because the airlines were granted anti-trust immunity, according to the complaint, “The overall effect on the industry was a regime characterized by excessive restrictions on competition and, concomitantly, significant harm to consumers in the form of both above-market prices and limited services.”
American filed a response to ASTA’s complaint, and then ASTA filed a rebuttal to American’s response, saying that American had overstated the functionality of its NDC and had falsely claimed that it was instituted in response to consumer demand. The rebuttal also claims that American created a false impression of the state of competition in the airline industry.
ASTA stated that it is not opposed to progress or new merchandising models, but it is opposed to “monopolists abusing their market power to force change that no one, including AA itself, is ready for. And, because of their monopoly power, making everyone else pay—including the consumer—the price for said change.”
It’s not a fight over new technology, says ASTA, it is the effect of a new technology that is reducing competitive pressure on a handful of major airline corporations that control almost the entire U.S. market, and treat it like a captive market, which in effect it is.
ASTA is asking its members to join the fight by getting involved with its grassroots advocacy efforts, which can be accessed at https://www.asta.org/advocacy/stateAndFederalCampaigns.
