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American Airlines since last fall has been discussing its direct-connect initiativeand explaining how direct distribution allows it to tailor offerings for travel management companies and their clients. AA managing director of distribution and merchandising strategy Bridget Blaise-Shamai appeared here during The Beat Liveto answer questions about the direct connect and the carrier's perspective on ancillary fees and optional services. When asked which types of merchandising she expects to be available in AA's mobile app, Blaise-Shamai said, "If I had my way, we'd offer everything" because airport kiosks are "yesteryear's technology," while mobile devices are rapidly growing in popularityamong travelers. Additional excerpts of the question-and-answer session follow.
What is the status of the direct connect, and how many agencies have signed up?
The status of the direct connect is that it is going very well for us. We have a number of agencies that are either already live and in production, are imminently going to be in production or are at the point of signing contracts with us. You can all appreciate that that information is indeed confidential for a couple of reasons. This is the feedback that they give to us. Firstly, our recipients of additional content--optional services, some of which we are already feeding through our direct connect--view [it] as a competitive advantage, and they would like to keep that to themselves until they are in a live environment. And then they have expressed to us some concern about some of their established relationships in the distribution model, namely with their GDS partners, so we're very respectful to that.
Why are airlines confusing the market by intermingling their ancillary strategy with their distribution strategy when they really are two different things?
Our viewpoint is that they are one in the same, that they will be distributed together. We have a price position on the base fare and we are going to take a service position on all the optional products and services that we sell. We see them firmly together in our minds.
Do you see a day when American's full suite of ancillary products show up in all the major online booking tools, and, if not, what is the greatest obstacle preventing that?
In our business plan, we do see such a day. We have discussions going on with all the players. It comes down to their ability to integrate into the direct connect. There are admittedly some obstacles with that, but they are not technical obstacles. They are those that reside more on the commercial side. Sometimes it is on the GDS side or with the booking tool provider themselves. But they are not technical issues.
How do you get ideas [for ancillary services] that are not just bags and seat upgrades?
You get really smart people like [AA director of merchandising] Cory Garner. He goes and creates a team, and they go out and look at best practices and benchmarks, and reach out to companies like Amazon and Dell to understand how they are doing it, and to see if we can't port over their success. We all know that Dell is crazy successful, and the customer owns how the product looks based on all the products he or she chooses to buy, which is, I think, how Dell makes its money. So it is a lot of research, best practices and trial and error, frankly. We have a host of things coming through the pipeline. The first slew are certainly travel-related, but we also have some very rich relationships in the AAdvantage program and a lot of them are hospitality-related. We'll look to be smart and efficient, and work with great brands along the way. It's a very big white piece of paper that we look to color in as best we can.
What do your ancillary services reportsthat you are delivering to the corporate buyers look like today, and do you envision any enhancements in the coming months?
Today, the issue is that there aren't any reports. You can't discern any additional purchase [information] for the most part. There are some things related to Admiral's Club or buy-onboards that have details around them, but it is a shortcoming in our industry right now. Thankfully, we have the Electronic Miscellaneous Documentscoming along, and American Airlines has publicly stated that we will be using EMDs. That is going to go a long way to solve that problem. EMDs go live later this year, and our timing for a product in the market is yet to be determined. But it is something we are going to do, recognizing the importance to our corporate clients and the travel agency community.
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