Leisure travel advisors have reacted with a mixture of anger, angst and acceptance to American Airlines' latest move to pull more direct bookings and agency bookings enabled by New Distribution Capability (NDC).
American earlier this week said it would stop awarding AAdvantage miles and loyalty accrual points for bookings through travel agencies that don't qualify as "preferred," a designation achieved in part by booking a certain percentage of business via NDC.
It's a decision whose impact will not be fully realized by travel agencies until late April. The new rules take effect May 1, and American will publish the list of preferred agencies on its website shortly before then.
One thing that is clear already, said Cory Garner, a former NDC strategist at American who now runs a consulting firm, is that this particular initiative is aimed mostly at leisure agencies.
Under the policy, American will continue to provide AAdvantage points for bookings made on behalf of contracted corporate travelers or members of the AAdvantage Business program for unmanaged business travel. Those exceptions will be in place regardless of whether the travel agency or travel management company (TMC) doing the booking is part of the preferred-agency program.
Garner said that the "very large majority" of business that an airline does with a TMC is under a corporate contract. That leaves leisure agencies more directly in the crossfire.
To become preferred, a travel agency must first be one that has a current incentive agreement with American. Agencies that have incentive contracts must also meet progressive NDC thresholds set by the airline. Agencies must sell 30% of their American tickets via NDC by April 21. That number will increase to 50% by Oct. 31 and to 70% by April 30 of next year.
Agencies will also have to meet American's display requirements within their booking tools, including complying with a new rule that they clearly denote tickets that are eligible to earn AAdvantage points.
Large OTAs are the most likely leisure-oriented agencies to hit the NDC thresholds. Last year, OTAs accounted for 95% of NDC-enabled transactions settled by ARC.
But OTA customers will nevertheless take a significant hit. That's because the new policy discontinues AAdvantage accruals for all basic economy tickets purchased through travel agencies, a rule that is likely to disproportionately impact OTAs.
Meanwhile, traditional leisure travel agencies, many of which have been hesitant to make the leap to NDC-enabled bookings amid continued concerns over servicing capabilities, could have trouble meeting the thresholds even if they do have an incentive contract with American.
Some good news for agencies
One piece of good news for leisure agencies is that if their consortium or host agency qualifies for the preferred agency program, then they, too, will qualify.
Peter Vlitas is confident that Travel Leaders Network will qualify. Vlitas is executive vice president of partner relations for Travel Leaders' parent, Internova Travel Group.
Vlitas said that Internova has developed a graphical interface tool for NDC bookings through Sabre that will be announced soon. That tool should drive NDC bookings within Travel Leaders Network.
An additional challenge, he added, will be persuading longtime travel advisors who are used to working through traditional GDS interfaces to make the transition.
"We can't stop an airline on how it wants to distribute their product," said Vlitas said, who also expressed concern for travel agencies more broadly.
"We don't think that agencies, who are the engine of tourism in the United States, should be impacted in such a short time frame," he said of the American policy.
'I lost sleep over this'
As a Travel Leaders agency, Columbia, S.C.-based Travel Unlimited might end up as a qualifying preferred agency. Still, the uncertainty caused by American's Feb. 20 announcement jolted co-owner Matthew DeGuire.
"I literally lost sleep over this. I had nightmares," DeGuire said the morning after American's announcement, noting that his agency's location near American's Charlotte hub makes the airline essential to his business.
"To me, this is American saying to the vast majority of travel agencies, not only do we not need you, we don't want you," DeGuire said.
Eric Hrubant, CEO of CIRE Travel, a member of the First in Service host network, also was critical of American, even though he expects CIRE will qualify as a preferred agency.
American, he said, still hasn't ironed out its NDC kinks. Meanwhile, most travelers want to earn loyalty points, no matter where they book.
"I think they are hurting the end traveler, not helping," he said.
Garner, though, said that American had telegraphed this move. The airline has been public about its broader goal of transitioning to 100% NDC or direct bookings.
Travel advisors and agencies, he said, are agents of an airline, he said, even if that's not what they want to hear. And as intermediaries, they serve not only the end customer but also suppliers.
"This is what it looks like when a channel has to compete for an airline's content," Garner said.
"It probably hasn't felt like a competition for a long time, and many may grouse at the idea that they have to be a competitor. But the reality is it's a competition."