AAdvantage Business is frustrating and weak. It’s about a 75% devaluation compared to the old small business program Business ExtrAA. Customer service is poor. But it performs two functions:
- Drives acquisition and use of the AAdvantage small business card from Citibank. Having that card lets you join the program without minimum number of travelers or activity. You also earn more in the program if you have the card and use it to buy American Airlines tickets.
- Pushes customers away from travel agencies using ‘one neat trick’. This is the part of the strategy that only revealed itself this week. I will explain.
When American Airlines announced the AAdvantage Business program, an odd quick was that you would only be able to earn in AAdvantage Business if you booked directly through American Airlines. But travel agents could still add an AAdvantage Business number to the reservation. This was.. odd?
Why would a travel agent need to add an AAdvantage Business number to a reservation, when the customer wouldn’t receive AAdvantage Business credit for the trip – since it hadn’t been booked directly with American?
On Tuesday American Airlines announced that starting May 1, customers would only earn miles and status credit on certain tickets that are booked through travel agents.
- non-basic economy fares booked through preferred travel agencies would still earn miles and status credits
- every six months American will update the list of favored agencies which, generally, are those which have adopted the technology to upsell customers for things like paid seat assignments and prepaid bags
- Corporate contract customers and AAdvantage Business customers are exempt from this policy.
What American has done is told agents that if they aren’t eligible to issue tickets that earn miles, they should sign those business customers up for AAdvantage Business. Then they’ll still earn miles! Problem solved!
- That’s why a travel agency would add an AAdvantage Business number to the booking – we had to wait for the big reveal that AAdvantage Business customers can still earn miles on tickets issued by third parties.
- But those customers still won’t earn credit in the AAvantage Business program.
- And now American has a direct marketing relationship with the customers booking tickets through agencies that haven’t adopted the airline’s preferred technology and shifted sales to that technology.
American Airlines can now communicate directly with these AAdvantage Business customers. They can upsell them. And they can send messages reminding these customers that they are losing out on AAdvantage Business earning by booking through a third party travel agent.
In other words, they’ve set up agents to sign up customers for marketing messages telling those customers they should no longer book through those agents!
On the one hand, the move to cut off mileage-earning from occasional customers undermines the effort that American is making to use the AAdvantage program to introduce new travelers to the airline and make them loyal, repeat customers and sell them the co-brand credit card.
On the other hand, American is taking travel agency customers and marketing directly to them about how bad their agency relationship is. They’re getting the ‘New Distribution Capability’ benefit of direct selling through the back door and they’re getting a direct line to the customer to convince them to book direct, reducing their selling cost.
It’s evil, but I kind of have to respect the gambit. Time will tell if it’s all too clever by half.
@ Gary — OK, I’m going to channel my inner Tim Dunn. All of these moves by AA smack of desperation. Me thinks DL and UA are eating their lunch.
What’s clever is you putting this together.
Thanks for thinking about this stuff and articulating what will go on.
AA is disgusting to its customers and to its partners.
If I owned a travel agency, I’d be sending bookings to DL, UA, European, Asian & Mid-East carriers.
Let AA backtrack like Delta.
Travel agents are the buggy whip manufacturers of the 2020s (soon to be followed by real estate agents). Anyone that uses a travel agent should be forced to pay whatever fee or commission they require instead of expecting the travel company (where the vast majority of their business and practically all their best business) book directly.
@Retired Gambler is spot on. Book direct, get your loyalty points and miles.
This was long in the making. I received many emails to enroll in business ExtrAA. No thanks. Glad I didn’t.
AA picking winners and losers.
It’s not only desperate, it’s outright extortion. The problem with NDC is that it doesn’t function. The GDS can still run circles around it.. As far as alienating Travel agents, they will soon find themselves losing huge chunks of corporate and entertainment business. American Airlines is not properly equipped to manage and enforce . Corporate travel policies, produce necessary reports for the management of a companies travel program, handle production and entertainment travel that is changes on a daily (and often hourly) basis. and involves extensive planning and logistics including white glove management of very VIP travelers and large group movements. Travel agencies today do all of that and more. An airline can’t do half that. I don’t even offer American Airlines as an option anymore. All of my main line business is directed towards Delta and United.
Why monopolies/mergers are never good for the public
AA as usual is underhanded in how they deal with all of their customers. They have a lousy product which they have they force on those who have few other choices.
This will hasten the exodus of international customers who have other choices and can purchase better products. It is understood that travel agents will find a way to shift customers to other providers when given the opportunity.
@Retired Gambler seems to have no clue what a corporate TA does. They serve their role, which is why airlines have never been successful in killing them off.
That said, TAs will adapt as they always have. NDC is horrible unless you are Expedia. For everyone else NDC is barely functional. TAs can always book direct for their clients who insist or are captive to AA anyway.
TXTVLAGT, spot on.
NDC is completely broken. It is nuts AA is pushing it before it’s working.
And yes, Retired Gambler, 80% of the readers of VFTW are best off booking direct, but you’re engaging in the fallacy of expertise (projecting your own expertise on others). 90% of the general populace is not best served by booking direct. And VFTW readers are not the general populace.
As TAs, we offer huge value the airlines cannot with emergency customer service by someone who has the desire and experience to fix the problem quickly, rather than being 100 deep in a line of angry customers with a gate agent who spends 97% of their time tagging bags and collecting IDs and boarding passes, so by definition and structure cannot be sharp on basic reservations and flight routes, unless they’re an extraordinary individual.
And we also offer huge benefits in making the booking and coordination process of large groups or complex international itineraries. Right now I’m working on a group from ORD to APL. The prices range from $2000 (Ethiopian and LAM Mozambique on separate tickets with an overnight in Maputo) to $3200 on Kenya Airways, with an LH/4Z combo somewhere in the middle. It took an enormous amount of expert work to get it down to that “cheap”. Sorry, but airlines are simply not equipped to handle groups or complex itineraries well.
What TXTVLAGT mentioned about corporate travel policies is also true for many TAs and orgs, but is outside of our niche.
What’s a travel agent ? Any fool should be able to do all their booking online on an app in 10 minutes !!
@EGE SAT
Our agency has told American we would not purchase the NDC product from them because as you mentioned, it is not functional. We are telling our clients that we will only offer and book American Airlines if requested, and only book in our GDS. If the fare is higher than the NDC fare and AA doesn’t want to award mileage, thats between the passenger and American. We are not going to entertain these childish tactics by AA whatsoever. We have moved more than 80% of our AA business to United, Delta, and international carriers. United and Delta are more than happy to “status” match even the highest AAdvantage elite folks. Plus, both have a far superior product than AA does so the benefit to the customer is enormous.
This may not be a brilliant as you think for the flyer. Many large companies only allow booking of travel through a specific corp travel agency, so the loser may be the consumer of the flight.
Not only on the Business side but also on the leisure side as a travel agent where many clients want to book a package bundle but don’t want to deal with the OTA’s which have terrible customer service, many of our suppliers do not have the NDC connection and as such we have been shifting significant share from American to Frontier, United, and JetBlue.
We used to book through these suppliers about 90% American Airlines and 10% all others and now the share is flipped 90% Frontier, JetBlue, and United and 10% American Airlines. The kicker is this is in one of American’s fortress hubs Philadelphia. I also know many other agents in our area that are doing the same. Not only that but being located in South Jersey many of clients are starting to use EWR more which is only about 10 to 15 minutes further than Philly for them whereas in the past they never considered it.
So far the push for NDC at American doesn’t seem to be working in our area but perhaps in DFW and CLT it is which is why they are doubling down on this terrible policy. In the meantime, many clients who used to solely fly American are now experiencing other airlines in our area and are starting to wake up to the fact that American Airlines doesn’t care about their customers.