American Airlines speaks up on direct connect distribution strategy – EXCLUSIVE
“One of the things floating around out there is an assumption that we will be charging travel agents and global distribution systems (GDSs) for accessing our content,” American Airlines' Director Marketing Communications Stephen Schlachter told CAPA's America Airline Daily. “That is not our intention. We never stated that and that is not part of our strategy.” Schlachter was responding to the uproar among travel agents, travel management companies (TMC) and GDSs. He stated flatly that this was not a GDS bypass.
Director of Merchandising Strategy Cory Garner, who briefed travel industry officials during meetings in Dallas in November and December, explained to CAPA that those meetings were largely to give them a heads up on the technology changes that will be needed to not only to sell optional services, otherwise known as ancillary revenue products, but keep track of them for corporate clients.
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“What we are doing is in direct response from feedback on both the corporate and leisure side,” Garner explained. “That feedback said that users want to be able to compare the ultimate trip costs for travel purchases. They want to be able to track optional services to see what they are spending money on. Corporate travel managers also said they were interested in negotiating optional services the same way they do now with car rentals and hotels. Direct Connect is designed to accommodate all the customer feedback we’ve received.”
Indeed, the ability to know the ultimate trip costs before a passenger books is high on the Capitol Hill agenda where Congress is already hot and bothered over Spirit’s decision to charge for carry-on bags. Yesterday, Allegiant CEO Maury Gallagher agreed with Spirit CEO Ben Baldanza that bags are a problem both with accommodating them and in boarding and deplaning. While five airlines have pledged not to institute carry-on-bag fees, Allegiant continues to study the issue.
Garner has no idea how the industry developed the idea that American wanted to bypass GDSs, or put up a pay wall to access its content. “I think the agencies are viewing this through the lens of past airline-GDS negotiations as cost savings,” he explained. “Offering our alternatives to extend to the travel agent the ability to sell optional services may help our position with GDSs over time but that does not necessarily mean that American is trying to bypass GDSs. We want to distribute through them as well. It is a matter of finding the right economic terms for using GDSs.”
He also said that travel agents will still be able to access all this information through a single screen. “Direct Connect also has the ability to book normal fares, either through GDSs or third party content aggregations such as BookingBuilder or similar companies, or, if they have their own platform have, directly with us,” said Garner. “Direct Connect is not a direct to consumer play. It is a direct to travel agency play. It is a web-based link for travel agents to access to an airline host reservations system. It is not new. We’ve been developing it since 2006 and other airlines have adopted it before us including Air Canada and easyJet who have been using it for some time.
“There is some angst because it is viewed as a GDS bypass strategy and they think they can only access American content through a separate screen which is really not our intent,” he continued. “It is an upgrade so they can sell merchandising; so they can access and sell more stuff and offer their customers more choices. That means consumers will need more advice from travel agencies. There also may be some angst because travel agents are paid an incentive to book through GDSs and they fear they will have to use a separate screen for American. They will still be able to do everything from a single screen.”
The Dallas meetings for travel agencies were part of an “agency road show during the course of November and December,” said Garner, explaining the meetings for travel agencies and corporate accounts were held all over the country. “We wanted to let them know about the technological changes that are coming to accommodate the sale of optional services which we call merchandising. We wanted to give them enough time to get ready to have access to the merchandising capability. This might include changes in the point-of-sale system their call center uses, corporate booking tools like Concur Quickbook, all the way to travel agency back office functions that consume data from the purchase.
“That data is going to be on a new type of industry standard document called the EMD – Electronic Miscellaneous Document – that is the ultimate data source for optional services being sold,” he continued. “There are a lot of technology changes necessary and we wanted to let them know. We wanted to say here’s what American is doing and that was really it. It was a technology discussion to help them get ready. We have no intention to change the GDS or travel agency economics.”
As far as the cost for upgrading their systems, Garner hasn’t heard of any estimate and thinks it will not be borne by travel agents but by GDSs and third party content aggregators who do the software agents use. “There may be training or transition costs related to increased call time because they are selling more things,” he said.
American has a pdf document on aa.com/agency with a link to Direct Connect which includes a list of all the third party vendors that can help agencies.