American’s behavior is anti-competitive and should be concerning to those who value consumer choice.

The ability for millions of travelers to compare all available prices and earn the miles they rightfully deserve when booking air travel is increasingly at risk. Due to changes being implemented by the airline industry, we are headed toward a system where shopping for the best price on the open market will be a thing of the past, and earning miles for travel won’t be guaranteed.

Why is this happening?

The U.S. domestic air travel market is largely dominated by four carriers – American, Delta, Southwest and United – that represent more than two-thirds of the market.

The dominant four carriers determine the competitive landscape of the U.S. airline industry as a whole. This current state of affairs is unlikely to reverse given the well-known barriers to entry associated with this industry.

Air travel booking is undergoing rapid changes, too, as the airlines have collectively decided that a different technological approach to air ticket distribution – New Distribution Capability, or NDC – is necessary to take more control of their product and how it is presented to the traveling public. While few within the industry realistically oppose this move, understanding and developing the capability to responsibly implement and use radically new technology takes time. An abrupt conversion designed to force change is bound to negatively impact millions of travelers, and that’s exactly what has happened.

Last April, American Airlines forced an underdeveloped technology (NDC) onto channel “partners” – travel agencies and Travel Management Companies – and abruptly removed 40% of their product from the existing travel agency distribution channel. That has resulted in millions of Americans, including business, government and elderly travelers, being barred from and unable to compare and choose lower fare options. Nearly a year after AA’s self-imposed NDC launch date, problems associated with basic servicing functions – such as comparative shopping, split tickets, booking multiple people in the same itinerary, cancellations, and rebooking – persisted, creating extraordinary challenges for AA’s own sales teams, independent agencies, and customers accessing AA’s services through NDC.

That’s why a formal complaint was lodged with the Department of Transportation in September 2023.

Much more is at stake here than just a fight over new technology – the forced  implementation of NDC has further reduced competitive pressure on the airlines, a move that should be extremely concerning to the government and the traveling public.

American Elects to Condition its Loyalty Program and Punish Travelers Who Want to Book with a Travel Agency.

As of May 1, millions of travelers – business and leisure – will no longer earn miles and AA loyalty points because the travel agencies through which they book cannot meet the unreasonable NDC adoption threshold that AA has established.  In an increasingly complex travel world, travel advisors play a critical role in helping both business and leisure travelers search for and secure fares, as well as troubleshoot issues as they arise. Those who book with travel advisors expect a level of customer service, and they rely on their travel advisor as a first line of defense when something goes wrong. AA’s actions threaten this crucial service for millions of travelers.

Eligibility for a travel agency to reach preferred status under AA’s new terms seems to be set unrealistically high. Agencies will have to take additional steps to implement NDC; and when AA’s preferred agencies are made public on April 21, agencies will be required to sell 30% of their AA tickets via an NDC channel. The required percentage of NDC sales will increase to 50% by October 31.

AA has also removed its lowest fares from non-NDC channels. So, now and for the foreseeable future, most corporations are choosing to pay higher fares in existing channels in order to maintain corporate travel policy compliance and fulfill the duty of care obligations owed to their employees. As of May 1, in addition to paying higher fares, corporate customers will be disqualified from miles and points on flights booked by their corporate agencies.

Business passengers from Dallas to London, Paris or Shanghai, who drive record profits for these airlines, aren’t eligible for miles and points? It seems strange that a company attempting to bring about a functional ‘modern retailing’ platform has decided that punishing its most lucrative and profitable customer segment is the way to achieve that.

What happens next?

The consequence of AA’s actions will be straightforward: travel agencies and the ecosystems that support them that cannot meet these criteria will be delisted from AA’s preferred status, and most agencies will not be able to meet this deadline. Particularly hard hit will be the 98% of travel agencies that are small businesses and who lack the resources and capacity to meet AA’s unduly stringent criteria in time.

As a result, travel agencies across the country will be unable to help their clients who fly AA and want to earn the points they’ve come to expect. The burden will be on the traveler to make sure their agency is preferred and to jump through even more hoops, just to obtain their loyalty points.

AA’s behavior is anti-competitive and should concern lawmakers who value consumer choice. Please take a moment to contact your representatives in Congress and express your concern with AA’s practices.