American Airlines sales & distribution strategy VP Cory
Garner talks:
- Financial incentives travel agents & content
distributors connecting via NDC connections
- What content & service enhancements NDC enables
-
Duty
of care benefits
American Airlines will enact an incentive program to
encourage travel agents and content distributors to connect via New
Distribution Capability methods. American partner British Airways announced a decidedly
different approach few weeks ago in which bookings through global distribution
systems will include a surcharge beginning Nov. 1. American, though, is banking
that the promise of financial incentives and enhanced content and services will
prompt more nuanced NDC integrations with agents and content distributors than
it has developed thus far. American Airlines VP of sales and distribution
strategy Cory Garner spoke to BTN transportation editor Michael B. Baker about how
the incentive program could reshape American's distribution landscape.
BTN: What
financial incentives are you offering for NDC bookings?
Garner: We are
offering $2 per AA-marketed segment that is booked through a Level 3 NDC
connection with American. That is an offer made not only to TMCs but every
other travel agency on the planet. It's a standard program that we published as
part of our standard travel agency terms and conditions.
BTN: How are
those payments settled?
Garner: Through
the normal ARC and [IATA Billing and Settlement Plan] settlement processes
between travel agencies and airlines.
BTN: To clarify,
this approach is purely about offering an incentive, and you will not be adding
surcharges to GDS bookings?
Garner: Correct.
We're not changing anything about how we do business with GDSs or legacy
channels.
BTN: Has any
other airline taken this approach?
Garner: As far as
we know, we're the first airline to answer the question specifically of what
we're willing to pay for an NDC connection.
BTN: Do you have
anyone signed up yet?
Garner: We've
been doing NDC for quite a long time, about 10 years, and we have about 50
travel agencies globally that are working with us. It accounts for about 10 percent
for our U.S.-point-of-sale travel agency volume. As far as how many agencies
are working with us under the new incentive program, the answer is zero as of
today. We have very few requirements for a travel agency to get into the
program. The major one is they use a content source that is Level 3-certified
with American by IATA. We don't have any third parties that are Level 3-certified
with us today, but we ourselves are Level 3-certified and it is a relatively
easy process for a third-party technology to get certified with IATA. We expect
those third-party technology companies that have a full end-to-end connection
with us via NDC will now go through the IATA certification process and become
approved technology providers to travel agencies, and the travel agencies
themselves will choose whether they want to participate in the program at all.
If they choose to, what's the best way to integrate with us? There are three
ways to do that. One is by integrating with our NDC connection directly, using
in-house technology. The second is using a third-party NDC content aggregator
like Travelfusion. The third is via a GDS to the extent that the GDS decides
they want to offer a Level 3 connection to American.
BTN: And no GDSs
are doing that as of today?
Garner: That
doesn't exist either, but we started working with the GDSs about five years ago
and we've made progress with each of them. We've implemented our paid seat
assignment products through each of the GDSs using NDC.
BTN: What exactly
does Level 3 certification entail?
Garner: IATA
administers a certification process for anybody who uses NDC. They certify
parties in the role that they play in the NDC chain. In NDC parlance, the roles
that are possible are the roles of an airline, a travel agency and an
aggregator. IATA has certification processes for each of those roles. Within
each role ... the lowest level is NDC
capability, meaning they are capable of using at least one NDC message. The
next level is Level 1, which is where many of our GDS partners are with us.
That means you're capable of doing ancillaries. Level 2 means you're capable of
doing shopping of fares and ancillaries. Level 3 means you're capable of a full
end-to-end NDC connection. For American to get the benefit out of this NDC
incentive program that we need, we need a full, end-to-end NDC connection. That's
how we offer the enhanced content and functionality that makes up the second
part of our value proposition.
BTN: Have you
established a time frame in which agencies must adopt in order to qualify for
incentives?
Garner: We want
every travel agency to make its own decision. If they decide to pursue it with
us, we want them to make their own decision about the time line in which they
do so and the amount of volume they wish to send our direction. We view this as
a journey. It's not a GDS negotiation strategy. It's much more important than
that. What we care about is [that] as many agencies as possible want to make
progress with us on technology because that's what will end up benefiting our
mutual customers and the travel agencies.
BTN: What
benefits will a Level 3 connection bring on the content side?
Garner: We
announced the tip of the iceberg when it comes to content functionality: that a
travel agency with a Level 3 connection to American would be able to provide
the ability to supply bundles of products and services with a fare customized
to a corporation or a set of travelers within the corporation. An example would
be the C-suite at a corporation: The travel manager may not want to bundle
services for all travelers, but perhaps they might want a bundle of high-touch
services for their C-suite. Through a Level 3 NDC connection, we can supply
that, which would be a first from an airline.
The second area of content functionality we announced is
seamless waiver and favor integration. In our corporate relationships, we grant
waivers and favors according to the customer. In today's world, to get access
to those waivers and favors, the corporate client and TMC have to punch out of
their existing systems or log into a separate website or get with American to
have them fulfill them. Using an NDC connection, we can pump that capability directly
into the TMC system and the corporate booking tool, so the travelers themselves
can self-serve when it comes to fulfilling waivers and favors, as can the TMC.
The third piece is enhanced duty of care capabilities. There
is a misperception that when a booking is processed via NDC, the booking data
goes down a black hole and is not easily reported, making it hard for a
corporate manager to track travelers. That's not the case. With NDC, we can
report all of the same data about bookings and tickets back to the TMC and
third-party duty of care systems, and because American has the best data about
its own operations, we can bring data to the table that hasn't been broadly
available up to this point. An example would be over-water positioning of our
flights. It's not widely known where our aircraft are when they cross the
Pacific or Atlantic oceans, but we have that data and can bring it to the
table. Another is confirmation whether a customer has boarded a plane or not. Duty
of care systems [today] rely upon booking data to determine whether a customer
was booked on a flight, but it doesn't confirm whether a person is on a flight.
We have that data and can supply it via NDC.
BTN: Have you set
any internal goals regarding NDC adoption among your partners?
Garner: We'd
like to have a Level 3 NDC connection behind all of our travel agencies because
it makes American more competitive versus other airlines. We're not setting any
deadlines on ourselves or anyone else because the important part is that the
industry takes a view that this is going to be an evolution and [stakeholders] have
an attitude of being willing to experiment for the sake of driving things
forward.