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When American Airlines last month launched an option for
passengers to pay an extra fee in exchange for priority boarding, discounted
change fees and more flexible flight standby, it sounded like so many other
fee-for-service initiatives airlines have deployed in recent years. However,
American's move is different in one key way: It is the first a la carte
offering the carrier is selling exclusively through direct channels at the time
of booking, effectively leaving the new "Boarding and Flexibility Package"
out of the hands of corporate travelers unless their agencies opt into the
controversial American Airlines Direct Connect.
Depending on your view, the move is either the only
efficient way for American to sell ancillary services, renewed posturing by the
carrier before its global distribution contracts expire next year or an
inefficient workaround poised to bedevil GDSs, travel management companies and
The Boarding and Flexibility Package is only one component
of AA's newly branded Your Choice suite, announced last month, which AA
director of merchandising strategy Cory Garner described as the carrier's "umbrella
brand for our optional services." The suite also includes such previously
available optional services as inflight Internet access, Admirals Club day
passes and confirmed flight changes, among others. However, those services
still can be purchased before boarding, or in the case of inflight Internet
access, on the plane.
"This is one element of our Direct Connect plans,"
Garner said of the Boarding and Flexibility Package. "You're starting to
see the specific products rolling out under what we've been saying for quite
some time: We'll be reserving merchandizing through our Direct Connect. We
think that's the best way to go about marketing to customers going forward.
That's also the best way to work with GDSs, ultimately."
The American Society of Travel Agents and the Business
Travel Coalition lambasted AA's Direct Connect plan as a way to flip the
distribution model and ultimately charge agencies for content, a charge AA
disputes, while mega agencies that spoke with BTN had little interest in
embracing AA's strategy.
Carlson Wagonlit Travel said it doesn't plan to access the
direct connect at this time, saying instead, "What CWT continues to
emphasize and advocate for with all suppliers, including American, on behalf of
its clients are consistent, industry-wide standards for all content."
BCD Travel also prefers ancillary services to flow through
the GDS, instead of through a multitude of direct connects, adding that the
agency has no intention of accessing AA's direct connect.
"We still view the GDS channel as a very efficient
channel, one that provides the level of service that our clients and corporate
customers need," BCD Travel senior vice president of global supplier
relations Rose Stratford said this month. "We're really not an advocate of
direct-connect channels. We all know we went down this path in 2006 and really
only found that it was a leveraging tool for airlines to renegotiate their new
GDS agreements, which, quite frankly, is what this feels like right now."
Stratford is referring to the direct-connect and GDS-bypass
rhetoric that surged in 2006 amid contract negotiations between distribution
providers and airlines. If American's Direct Connect is yet another round of
posturing, then the carrier has put a slightly different spin on it than it did
in the last round of negotiations, since the carrier is inviting even the GDSs
to plug in.
Another difference from 2006 renegotiations: American is the
lone legacy carrier to aggressively pursue such direct-connect efforts, at
least for now, as Delta Air Lines and United Airlines extended their GDS
agreements to 2013, while Continental Airlines has a proposed merger with
United to contend with, a priority that likely trumps distribution costs,
American isn't presenting its direct-connect strategy as
leverage for negotiations, or even GDS bypass, but rather as the only viable
option to sell its growing suite of ancillary services. "Our desire is to
continue distributing through GDSs," Garner said. "It's just that the
direct connect gives travel agencies and us more options than just the GDS for
distributing our content. For that reason, our direct connect has been billed
as a GDS-bypass strategy, but that's only if the GDSs and American can't come
to any commercial arrangement for distribution of these services through the
GDS via the direct connect."
Those discussions are ongoing, the GDSs said, with American's
GDS contracts expiring at the end of summer 2011. Sabre, for one, in a
statement said, "It's difficult for us to provide you any insight on this
issue because AA has provided us with few details about its proposed approach."
Sabre said it already supports the sale of some ancillary services with United
Airlines, with which Sabre can upsell economy passengers to the carrier's
Economy Plus cabin, and Canada's WestJet.
"I can't answer to you right now whether we're going to
connect directly with them to sell ancillary services," said Amadeus head
of marketing and airline distribution Cyril Tetaz, "but we are in engaged
discussions with them, and we do want to find a solution to distribute American's
ancillary services. Our goal, in the end, is to enable all the airlines to
distribute through the travel agency channel. If it means having different
solutions, we have to get there, so long as the solution we find is amenable
for all parties and works for all parties."
Sabre and Amadeus each pointed to ongoing efforts—embraced
by ATPCo, ARC and other bank settlement plans, as well as many travel
agencies—to distribute ancillary services through the GDS, a solution that in
part is based on the electronic miscellaneous document. Both Sabre and Amadeus
said to expect solutions touching down in the corporate marketplace by the end
of this year. "We are also prepared to support shopping, booking,
fulfillment and reporting of ancillaries filed through ATPCo, fulfilled using
EMD for travel agencies and airlines," Sabre said.
Meanwhile, American is moving ahead with Direct
Connect—offering it up to any agency, or even GDS, that is interested in
plugging in, and making some content unavailable to them if they don't.
Asked last month if any agencies were yet enabled to sell
the offering, Garner said, "At this point, no," but added, "At
the end of July, agencies using Direct Connect will be able to sell this
option. It would be up to them. Even on AA.com, we had to do some programming
to upsell this to customers, so every agency will have to determine whether
doing the development to offer the upsell is the right thing for them to do."
Garner said some agencies are using the direct connect "for basic
GDS-style technology for managing fare content." Still, the number of
agencies using it remains small, Garner noted.
Meanwhile, AA plans to add many more Your Choice offerings,
Garner said, including some only available through Direct Connect. "This
is another step in an evolution, and something we see as giving the customer
more choice, more control, more visibility, more ways to personalize their
travel," he said. "This is a point along an upward trend."
This story originally appeared in the July 12, 2010, issue
of Business Travel News.