American Airlines Accuses Travel Agents of Stifling Innovation for Self Interest

Skift Take

American Airlines has lashed out at U.S. travel agents in a scathing response to the complaint that the airline’s robust distribution strategy was unfair.

American Airlines has responded to the American Society of Travel Advisors (ASTA) complaint about the airline’s ticket distribution through the New Distribution Capability (NDC), calling it “a frivolous compilation of rhetoric and unsupported allegations.” 

The airline refuted ASTA’s claim that its actions harm competition or consumers. It suggested that ASTA’s complaint represents an effort by some travel agencies to impede the pace of innovation due to their reluctance to invest in new technologies.

“ASTA’s complaint is not an effort to protect consumers: it is an effort to protect certain agencies,” said American. “It is a plea to the government, on behalf of some travel agencies, to slow the pace of innovation for those agencies that have not invested in new technologies or adjusted old ways of doing business.”  

The Background

In a complaint filed in July with the Department of Transport (DOT), ASTA said that by removing over 40% of its fare inventory from traditional, i.e., non-NDC, booking channels, American Airlines was causing substantially higher air ticket prices for consumers, indirectly impacting the ability of travel agents to do their job .  

In its response, filed on Tuesday, American Airlines stated that NDC is more transparent than the older Electronic Data Interchange for Administration, Commerce, and Transport (EDIFACT) technologies. The airline said it continues to make all fares viewable and comparable in both EDIFACT and NDC channels.

American Airlines has made more changes to its distribution strategy than nearly any giant carrier in the world, since around 2006. Its response echoed the sentiments of CEO Robert Isom, expressed earlier in November at the Skift Aviation Forum, that NDC is a “competitive and consumer-friendly advancement” in the travel industry.

More Options for Consumers 

The lengthy response to the DOT sees American emphasize the NDC-enabled transparency for consumers.

“The evidence shows that customers are (understandably) more satisfied with flexible and responsive NDC-enabled technologies than with dated Electronic Data Interchange for Administration, Commerce, and Transport (“EDIFACT”) technologies launched in the 1970s,” said American. “And for good reason: Customers who are given more information can select what they value, and they understand what they are buying… There is no evidence in ASTA’s 50-plus-page complaint that American’s NDC plans have led to higher prices or fewer options on any route, increased American’s alleged dominance, or otherwise harmed consumers. ” 

“ASTA’s complaint is limited to the fact that American does not allow all of its fares to be transactable using EDIFACT. That may be problematic for agencies stuck in the old way of doing business, but customers, of course, can still get access to those fares through AA.com, meta-search travel sites, and/or by using other agencies that have adopted NDC,” said American. “In that case, an agency need only do what is best for the client — explain that another fare is available at a lower price on AA.com or through other third-party booking tools and agencies using more modern technologies.”

Lagging in Technology Adoption

American Airlines further argued that its changes to ticket distribution have spurred other U.S. airlines, including United Airlines, to adopt NDC-based technologies.  

“United Airlines has implemented changes that have resulted in as much as 40% of all sales being fares that are only accessible through its NDC channel and, as of September 5, 2023, has entirely removed Basic Economy offerings from EDIFACT. (Mysteriously, ASTA seems fine with both of United’s efforts.)” said American. 

The airline further stated that agencies in America were lagging in technology adoption to the detriment of U.S. consumers. 

“In fact, many of the agencies now complaining about NDC efforts are already using these same technologies in other countries. Regrettably, though, agencies based in the United States lag far behind in NDC adoption, which is the real harm to American consumers,” said American. 

As the process moves forward, the DOT is expected to review the response and determine the next steps. This could involve further investigation or potentially a ruling on the complaint, shaping the future dynamics of airline distribution and travel agency operations. 

Skift has reached out to ASTA for further comment. 

Article source: https://airlines.einnews.com/article/670499645/lxQOE7xKt-3BN0L8?ref=rss&ecode=vaZAu9rk30b8KC5H

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