American Airlines is to rethink its controversial new distribution capability (NDC) policy after suffering a drop in sales from the trade.
Chief executive Robert Isom told an investor conference on Wednesday that the sales strategy would be revamped after generating less revenue then expected from travel agencies and business travellers.
The British Airways partner carrier has been engaged in efforts for more than a year to move bookings away from traditional sales channels.
The battle over American’s imposition of new distribution capability (NDC) technology began last April when the carrier withdrew more than 40% of its fares from GDSs and left full content only available via NDC channels.
But the approach has made it harder to book with American. Isom partly blamed it – as well as weaker pricing owing to an industry-wide abundance of flying capacity – for a softness in last-minute US domestic sales since last month, the Financial Times reported.
Chief commercial officer Vasu Raja, a champion of the plan to sell tickets via NDC, will leave the company next month in what Isom called “a reset”.
“We moved faster than we should, and we didn’t execute well,” he said. “We regret that and the difficulty that it created for our agency and corporate communities.So we are going to modify our distribution strategy.
“We’ve used a lot of sticks. We’ve got to put some more carrots in place and make sure our product is available wherever customers want to buy it.”
The airline is also abandoning plans to stop awarding Advantage loyalty scheme points on bookings made via travel agencies that don’t qualify as preferred NDC distributors.
“We’re not doing that because it would create confusion and disruption for our end customer,” Isom said.
Second-quarter operating earnings would be “off by a couple of hundred million dollars”, he added.
American lowered its second-quarter guidance on Tuesday, saying it would earn between $1 and $1.15 per share, instead of $1.15 to $1.45.