NDC adventure costs American Airlines 1.4 billion Euros

The focus on direct sales and the failed attempt to move travel agencies to NDC bookings will cost the airline 1.4 billion euros this year.

CEO Robert Isom admitted this recently during the presentation of the quarterly figures. American Airlines had already abandoned the strategy at the end of May and fired Chief Commercial Officer Vasu Raja with a generous severance package. Now Isom explained that the impact in the first half of the year amounted to 700 million euros and that similar impacts are expected in the second half of 2024.

He hopes that the impact can be limited by resuming cooperation with travel agencies and corporate customers. "I want to be very open. We overextended ourselves with direct flights, and we need to find a way to play in the richer pool of indirect revenue, and that starts with having content, positive relationships with travel management companies and agencies, and then supporting our corporate customers in a way that makes them feel valued," said Isom.

Since the course correction at the end of May, American has restored most of the content it had withdrawn from the traditional GDS. This alone, said Isom, has improved American's share of travel agency bookings. He emphasized the importance of GDS sales and pointed out that American had sold 14 billion dollars through the GDS last year. Isom also mentioned that the airline is working on strengthening its ties with travel agencies and improving its offerings to better cater to the needs of corporate clients. This includes providing better support and more comprehensive services to ensure customer satisfaction and loyalty.

The company is also exploring new strategies and technologies to enhance its indirect sales channels, aiming to recover from the financial setbacks experienced this year. Overall, the airline is committed to balancing its direct and indirect sales approaches to create a more sustainable and profitable business model.