When a stick doesn’t work, reach for a carrot—and apparently that’s the smart new approach to its travel-agency partners at American Airlines. The carrier has followed up the recall of its highly unpopular NDC booking strategy by promising to pay 10% commission on NDC-enabled bookings of Main Plus, Main Select, and Flagship Business Plus ticket bundles through the third quarter of 2024.

Main Plus NDC bundles include a Main Cabin Extra or preferred seat and a checked bag. Main Select offer refundable fares, same-day flight changes, priority boarding, priority check-in and a choice of any seat in the main cabin at the time of booking, including Main Cabin Extra. Flagship Business Plus includes a business-class seat, access to a private check-in area, expedited security screening, Flagship First dining in a Flagship Lounge and a free third checked bag.

The news comes as a welcome bow to the role of travel advisors in the industry. Just two weeks ago, AA’s CEO Robert Isom canceled a set of proposed procedural changes that would have denied frequent-traveler points to travelers on bookings not made by preferred travel agencies through the NDC direct channel. In a quarterly call on May 29, Isom acknowledged that the changes—meant to push travelers and travel agencies to use direct channels instead of GDSs—had resulted in falling revenues and forced a cut in AA’s profit forecast.

By the next day, Vasu Raja, author of the stick approach, was gone—and Isom apparently already was reaching out to travel advisors, instead offering commissions to reward those who showed support.

The business travel blog The Beat first broke the story that several travel agencies, all of whom requested anonymity per their contracts with AA, received a memo from American Airlines introducing the program on May 30. It will last through the third quarter of 2024.

AA’s hard stance on pushing direct bookings, which included no longer offering frequent-flyer points to travelers who don’t book direct, apparently has backfired. AA cut its revenue and profit forecasts In its quarterly earnings call yesterday, and today watched its shares tumble 18%—the biggest fall since Covid.

As a result, American will be forced to cut its capacity growth for the rest of the year by about 8% and part ways with chief commercial officer Vasu Raja, who headed the strategy that encouraged travelers to bypass travel advisors and other third parties.

“We know we’ve dug ourselves a hole in this second quarter, and our operating earnings are going to be off by a couple of hundred million dollars. We’ve got a lot of work to do to recoup that,” said American CEO Robert Isom.

Indeed, ASTA in August filed an unfair trade complaint against American with the US Department of Transportation, accusing the carrier of causing “substantially higher air ticket prices for consumers and frustrated travel management companies” by pushing agencies to use AA’s NDC direct-booking technology.

The announcement comes just days after AA’s May 1 deadline, after which it said it would award AAdvantage miles and loyalty points only to customers of “preferred” agencies, meaning those that have a 2024 incentive agreement or American NDC channel, and use it for 3% of sales by April 21, 50% by October 31 and 70% by April 30, 2025.

Last week, after ASTA responded to American Airlines’ move to deny frequent flyer privileges to customers who are not booking through its New Distribution Capability (NDC), I had the good fortune of speaking with William McGee. He is one of the top authorities on airlines, and a consumer advocate in the never-ending battles between airlines and the public they are mandated to serve. There is no better way to get clarity on airline issues than to speak with McGee Read the rest of this entry »