American Airlines has recently made changes to its New Distribution Capability (NDC) strategy, aligning it more closely with its competitor, United Airlines. This revised approach involves shifting towards a lighter-touch method when working with travel agencies. While the goal of this new strategy is to regain market share, it may take some time for American Airlines to see the desired results.
According to Cory Garner, a former NDC strategist at American Airlines, the decision to move away from a punitive approach towards NDC adoption could potentially slow down the overall acceptance and implementation of this digital retail technology within corporate travel agencies and Global Distribution Systems (GDSs). Garner believes that NDC adoption may “lose momentum” in the wake of these strategic changes.
American Airlines’ new strategy includes reintroducing most content to legacy systems, similar to United Airlines’ approach. The airline will focus on basic economy fares, introduce dynamically priced fares and ancillary content via NDC, and offer 10% commissions on certain NDC bundles. While these changes bring American closer to United’s strategy, the airline still lags behind in terms of dynamic pricing capabilities.
One of the major hurdles that American Airlines faces is regaining the trust and support of travel agencies that turned away from the carrier during its initial NDC strategy implementation. This loss of market share, particularly for domestic and close-in bookings, has had a significant impact on the airline’s performance relative to competitors like United and Delta.
Industry experts have differing opinions on the long-term impact of American Airlines’ revised NDC strategy on the overall adoption of this technology. While some, like Steve Singh, remain optimistic about the future of NDC as a primary content distribution vehicle, others, like Cory Garner, are less convinced that a carrot-based approach will drive adoption.
As American Airlines navigates the challenges of redefining its NDC strategy, the industry as a whole will be closely watching the impact of these changes on the adoption of digital retailing technology. The success of American’s revised approach will depend on its ability to rebuild relationships with travel agencies and effectively communicate the benefits of NDC adoption in a rapidly evolving market.
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