American's direct hit on agents

David Stoller joined his family’s travel agency, Enterprise Travel, in 1983. Now, 40 years later, his job is focused on ensuring the human aspect remains, with a lot of effort and a little humor.

Travel agents are legally bound agents of the vendors we sell. Those of us who have been in the business for decades rather than years have faced extinction — then persevered — more times than we care to think about.

And now comes the latest three-letter term of endearment: NDC, the “N” representing “new.” But there is nothing new about this.

It’s now been more than a month since American Airlines knocked over its wine glass and stained the industry.

If you don’t understand what NDC represents, it’s simply what we have been doing for years: offering customized travel experiences, knowing a client’s preferences for air seating, meals, upgrades and whatever else can be selected by a passenger.

It’s my belief that once the airlines figured out how to download systems into a coherent computer display, their ultimate goal was disintermediation. And unbundling the fare into revenue-producing segments also separates passengers by how much money they have to spend on ancillaries. (Once upon a time, all passengers — well, all coach passengers — were treated equally.)

And now, airlines want to bring their sales tool, carefully segmented through known preferences, directly to the client, without letting agents (who actually do know the client) get in their way. AI — and the “A” doesn’t stand for advisor — will be directing the client, who will perhaps end up paying more in the process.

All this reminds me of IATA’s Dynamic Offers. The organization’s intention was not to replace travel agents but to make all of these features available to us at the beginning of the sale process, rather than after. The technology was not adopted by all the airlines. If it were, the sheer volume of transactions would be off the charts. 

It seems clear that American, with its rush to put out a half-baked NDC, is making no secret about its intention to move sales away from travel advisors and into direct sales or only through preferred agencies, rather than all agents. Other airlines have sent signals that agents will remain a key factor, but not American.

American says it wants to eliminate what it calls “subpar bookings.” They compare the GDS to the eight-track, destined to be replaced by NDC, the leap to digital music.

That’s not what we’re seeing.

First of all, many of the functions of American’s NDC are already in the GDS. Instead of rushing to market with a product that simply doesn’t work at levels that make it practical, American could have implemented a GDS fee similar to what the Lufthansa Group and others do, retaining sanity in the system. 

Interestingly, American frequently mentions the word “transparency,” but this system, in my estimation, does nothing but hide information from the average customer. Through NDC Sabre, American is unable to make reservations for families or provide after-sale function and, currently, requires there be only American segments in a passenger name record to avoid accidentally canceling what the agent sells, should American make an adjustment after the sale.

My opinion? Younger agents will simply demand a new booking process. But by then, I shall be in the tar pits of retirement. The reality is that there are still too many what ifs in this industry that need to be addressed before eliminating the human element.

And, almost comically, even agents with preferred-supplier arrangements have no guarantees. The new American NDC works “for the most part,” they report. It has clearly not been battle-tested.

American is sliding like an untethered barge in an oil slick. To those of you who believe you somehow got a golden goose by having American as your preferred supplier, your goose is about to be cooked.

And to simultaneously eliminate consortium commissions, sales offices and GDS fares, American made a bold statement by actually using another familiar old term: “Bypass.”

So, what’s next? We know more airlines will evolve to direct sales, but unlike American, they are gifted with the option to provide agents with equal access and support the idea that the most important people are consumers and that we, travel agents, are the consumer’s trusted ally. 

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