“We moved faster than we should, and we didn’t execute well.”

This week, American Airlines CEO Robert Isom announced the airline will be revising its pioneering New Distribution Capability (NDC) strategy.

Back in April 2023, the airline proceeded with a controversial plan to withdraw over 40 per cent of its fares from GDSs and only offer its best available third-party public channel content through NDC connections, a decision which the airline stated was “needed to drive forward better customer experiences.”

However, at an investor conference on Wednesday, Isom attributed the airline’s lower-than-expected revenue from last-minute domestic sales, at least in part, to this distribution strategy. Isom told investors:

“While we all know that NDC modern retailing [on] internet-based channels for selling our product is the future of airline distribution, We moved faster than we should, and we didn’t execute well. We regret that and the difficulty that it created for our agency and corporate communities. So we are going to modify our distribution strategy […] We’ve used a lot of sticks. We’ve got to put some more carrots in place and make sure our product is available wherever customers want to buy it.”

Isom added:

“We spent a lot of time listening to our agencies and our corporate customers, and we hear their feedback. We’re taking some immediate actions to respond and adapt and over the coming weeks we’ll be working to ensure that we’re optimising for our customers and American as we move forward […] Instead of removing content from agencies that are relying on legacy technology, we need to incentivise more and enhance and promote NDC,”

Isom also confirmed a “reset” involving Chief Commercial Officer, Vasu Raja leaving the company next month. The CCO had been an advocate of the airline’s bold NDC strategy but on Tuesday, the airline shared a press release announcing his exit for June.

Do you think American’s change in strategy will impact the course of other carriers’ NDC journeys?

 

World Aviation Festival in October is exploring NDC strategy with panels including: “How does NDC need to further develop so that we are fully prepared for an offer-order world?” and “Rethinking your NDC content strategy – How are you differentiating your offers, developing new bundles, using dynamic pricing and evolving your own ecosystem?” Book your ticket now to join the conversation.

 

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