American Airlines’ recent shift in their New Distribution Capability (NDC) strategy mirrors that of their competitor, United Airlines. The adjustment in approach towards travel agencies is now more lenient, hoping to regain market share lost during previous efforts. The decision to revert back to traditional systems and only withholding basic economy fares aligns American with the tactics employed by United.
American Airlines has introduced dynamically priced fares and ancillary content through NDC channels, following United’s footsteps. These dynamic fares continuously adapt to market conditions, a feature unsupported by legacy GDS technology that operates on alphabet-based fare buckets. American has also reinstated loyalty points accrual on tickets purchased through agencies and offered commissions on NDC bundles and ancillary sales.
While American’s revised strategy is akin to United’s, it is slightly less aggressive. American pays commissions on NDC bundle sales, a distinguishing factor since United does not. United’s dynamic pricing capabilities also surpass that of American, giving them an edge in content differentiation within the NDC framework.
American Airlines CEO Robert Isom attributed the loss of market share in the agency sector to their previous punitive NDC approach. However, industry experts suggest that American’s financial performance is influenced more by network structure and loyalty program success than distribution strategies. Rebuilding relationships with travel agencies may prove challenging due to recent decisions made in favor of rival alliances.
The overarching question now is whether American’s shift will hinder NDC adoption across the industry. While some remain optimistic that NDC will prevail as technology evolves, others, like consultant Cory Garner, doubt the effectiveness of a softer approach. Garner emphasizes that past experience has shown that aggressive strategies yield better results in driving NDC integrations.
Despite the uncertainty caused by American’s strategy reversal, advocates like Steve Singh believe in the transformative power of NDC. Singh anticipates a significant rise in NDC adoption over the next few years, indicating that it may become the primary channel for content distribution. Tools like Spotnana, which streamline NDC bookings, are poised to support this transition.
Navigating the complexities of NDC adoption post-American’s revised strategy demands patience and strategic planning. Travel agencies, along with airlines, must find common ground to foster growth in the NDC ecosystem. Balancing the needs of all stakeholders while embracing technological advancements will be crucial in shaping the future of airline distribution.