Skift Take

American Airlines tried to drag an entrenched industry toward the airline’s vision of a more productive distribution future. But the financial hit stung.

Dennis Schaal

Online and offline travel agencies had faced a July 11 deadline: That’s when flyers buying American Airlines tickets on certain booking sites would have no longer been able to earn AAdvantage Miles.

But American Airlines CEO Robert Isom said Wednesday that the airline has dropped the idea. It was part of an overall retreat in American’s direct-booking strategy as it faces softness in close-in bookings and a weaker financial outlook.

“Next month, we were going to differentiate who earned AAdvantage Miles and who didn’t, based on where they booked. That’s off,” Isom told investors and analysts at a Bernstein conference. “We’re not doing that because it would create confusion and disruption for our end customer, and we’re going to make sure that we take care. We’re listening to feedback.”

The plan had been that the airline would designate “preferred agencies” — who were required to book at least 30% of their flights through American’s New Distribution Capability — and customers of these online and offline travel agencies would have been able to continue to earn AAdvantage miles when buying tickets on these third-party sites.

Travel agencies that didn’t get the airline’s stamp of approval faced the prospect of losing lots of customers who would have had to book American flights on AA.com or a preferred agency.

The airline initially said it would designate preferred agencies by May 1, and later moved that deadline to July 11.

Travel Agency Reaction

Many agencies had no clue if they were going to make the cut.

Zane Kerby, president and CEO of the American Society of Travel Advisors, had fought the airline’s distribution policies, and applauded the airline’s reversal.

“I’m grateful for American Airlines’ renewed recognition of the essential role that travel advisors play in facilitating air travel for our shared customers,” Kerby said. “I want to extend my thanks to American Airlines CEO Robert Isom for acknowledging its previous approach was flawed. Reversing the decision to withhold AAdvantage points and miles for agency bookings is a testament to the firm position that travel agencies hold in the airline distribution channel.”

Kerby said he welcomed the opportunity to work with American Airlines on a “responsible implementation of its NDC program.”

When the news came, ASTA was coincidentally conducting it annual national conference in Dallas, in the airline’s Fort Worth headquarters back yard.

American hasn’t definitively given up on direct distribution, however.

“We’re learning and adapting,” Isom said. “We know that NDC, modern retailing provides a better experience for the end customer. And we know that we will get there over time, but we have to go about it differently. We’re going to make it easier, we’re going to execute better and we’re going to do a lot more to try to bring people along with us.”