American Airlines recently announced its plans to implement dynamically priced fares in New Distribution Capability (NDC) channels. This shift in strategy includes the introduction of NDC-exclusive bundled fares and ancillaries. The decision was communicated to travel agencies in an email on June 11, as the airline aims to enhance its distribution capabilities.
Previously, American Airlines had removed fare content from legacy Global Distribution Systems (GDSs) as part of an unsuccessful attempt to encourage agencies to adopt NDC. Basic economy fares were only available through NDC during this period. However, the recent announcement indicates a reversal of this approach, with the carrier returning fare content to GDSs while keeping basic economy fares exclusive to NDC.
American Airlines’ updated strategy appears to draw inspiration from United Airlines, which had previously implemented similar changes. United removed basic economy fares from legacy GDSs and introduced dynamically priced fares exclusively through NDC. This shift allowed United to offer a wider range of price points and adapt to changing market conditions more effectively.
The transition towards dynamically priced fares poses challenges for traditional booking systems that rely on fixed booking codes. Legacy GDSs struggle to accommodate the flexibility and variety offered by dynamic pricing models. However, airlines like United and now American are embracing this change to improve distribution efficiency and cater to evolving customer preferences.
American Airlines has not provided a specific timeline for the implementation of dynamic fares and NDC-exclusive products. More details on bundled fares and ancillaries are expected to be released in the coming months. The airline has also introduced a new incentive program for NDC bookings, offering commissions on sales of specific bundles and ancillary services.
American Airlines’ shift towards dynamic pricing in NDC channels reflects a broader industry trend towards modernizing distribution strategies. By adopting a more flexible and customer-centric approach, airlines aim to enhance revenue opportunities and improve the booking experience for travelers and travel agencies alike. As the travel industry continues to evolve, adapting to new technologies and pricing models will be essential for airlines to remain competitive and meet the changing demands of the market.