In a move that signals its commitment to enhancing distribution capabilities, American Airlines has decided to extend its New Distribution Capability (NDC) commission program until the end of the year. Initially set to conclude on September 30, this program awards travel agents a 10% commission on NDC bookings in specific fare bundles—Main Plus, Main Select, and Flagship Business Plus. This extension indicates the airline’s recognition of the critical role that travel agencies play in ticket sales and its desire to foster stronger relationships with them and corporate clients.
American Airlines’ decision follows a turbulent period during which the airline attempted to transition agencies towards NDC technology. Approximately 13 months ago, the airline adopted a harsh strategy that included significantly reducing fare content available through legacy Global Distribution Systems (GDSs). This approach sparked discontent and frustration within the travel community, which prompted American to rethink its strategy. By scrapping the rigid policies of the past, the airline demonstrated an acute understanding of the current market dynamics and the need for collaboration in implementing new booking technologies.
Scott Laurence, American’s Vice President of Partnerships and Retailing, provided insight into the strategic vision behind the NDC initiative. He highlighted the importance of continuous pricing—a cutting-edge approach enabling dynamic fare adjustments—that is already being successfully adopted by competitors like United Airlines. Traditional distribution models, which depend heavily on fixed alphabet-based booking codes, lack the capacity to offer this level of granular pricing. As Laurence aptly pointed out, the shift towards continuous pricing not only facilitates better fare visibility but also encourages the adoption of NDC by demonstrating its tangible benefits to customers.
The underlying philosophy of this shift is customer-centricity—a crucial aspect in today’s highly competitive aviation market. By providing access to the lowest available fares, American Airlines aims to enhance transparency and customer satisfaction, thereby attracting more travelers to book through NDC-enabled channels. “It’s hard to look at that and not think it has potential to be a really effective product for American,” Laurence remarked, reflecting on the anticipated positive outcomes of this transition.
American Airlines’ extension of the NDC commission program marks a significant transformation in its distribution strategy. By actively engaging with travel agencies and adapting to new market trends, the airline is positioning itself for success in a rapidly evolving industry landscape. While details of their experimentation with continuous pricing remain under wraps, the airline’s proactive stance suggests that it is paving the way for a broader embrace of innovation in air travel bookings. This strategic shift not only recognizes the importance of traditional travel advisors but also demonstrates a commitment to enhancing the overall travel experience for customers—an essential factor in maintaining competitiveness.
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