Industry Reacts to American's 'Regret,' Raja's Departure

Just as American Airlines' distribution strategy announcements beginning in late 2022 ushered in a flurry of commentary from the industry, so too did its back-to-back pronouncements this week, first that chief commercial officer Vasu Raja would leave the company in June, then that CEO Robert Isom the next day said the carrier had some "regrets" about its distribution strategy execution and that "immediate actions" to change course were underway.

Following are a few of the responses received by BTN or shared at industry events or posted online from members of the business travel community. 

Mark Stansbury, senior manager of global travel, Lockheed Martin

I am proud to say that Lockheed Martin was a leader in opposition to American's strategy. We immediately moved significant share off AA. 

AA was told by myself and by many of my peers that its strategy was flawed from day 1. Vasu was the architect, but Robert Isom agreed to it and fully supported it despite being told by industry leaders it was going to fail. 

Vasu and his disciples insisted that our corporate travelers were AA's customers. Myself and many of my peers begged to differ with Vasu. Managed corporate travel programs manage their respective traveler groups, not the airlines. AA needs to realize that the corporate travel programs are their customers, not our travelers. Cater to the managed travel program's needs, don't try and fracture our programs by trying to push travelers into booking direct. This was what Vasu naively thought would happen, but well managed corporate travel programs don't have leakage, and to the disappointment of AA, can move significant market share to airlines that never lost their appreciation for the consistency delivered by managed travel programs. 

We continued flying through 9/11, we continued to fly through Covid, but as soon as there [was a] post-Covid bump in leisure travel, AA kicks long-standing corporate relationships to the curb. AA was told that Vasu's narrative of business travel will not recover and the ridiculous creation of "bleisure" were nonsense, and that based on decades of cyclical travel patterns, corporate travel would return and the leisure bubble would burst. American and Robert Isom refused to listen and arrogantly pushed ahead. 

I know that Lockheed Martin aggressively made changes after AA announced its new strategy, I want to thank my peers that did the same and showed the suppliers of travel the power of well-run travel programs. 

Andrea Caulfield-Smith, managing director of global business travel, The Advantage Travel Partnership

The latest news from American Airlines in regard to the removal of the preferred [travel management company] status, will be very well received across the TMC community. American Airlines' intention to implement this strategy was causing concern amongst the TMCs, as benefits such as frequent flyer miles are so important to the traveler and their choice of airline. This news ensures that the TMC can continue to play their vital role across the ecosystem, so it is a win-win for everyone.

In addition, the acknowledgment of the pace of American Airlines' adoption of modern retailing, and the challenges of TMCs servicing [New Distribution Capability] transactions is refreshing to hear. It is clear that American Airlines has taken on board the feedback from the TMC and wider industry community and taken positive action of change. By using NDC as a positive lever to increase modern retailing adoption in the future is a refreshing and welcomed approach.

Jeff Klee, CEO, AmTrav, via LinkedIn

There's a lot of giddiness this week among TMCs at American Airlines' apparent about-face on their sales and distribution strategy. One TMC email talked about American's "NDC disaster" being proven a "massive failure." Some are taking great delight in this week's news, and it really is noteworthy how successful travel buyers were at "voting with their feet."

But after they finish gloating, what will TMCs say to their customers who still can't purchase a Main Cabin Extra seat on their booking tool? Or change their tickets as easily as they can on AA-dot-com? Or be able to instantly choose another option when a flight is canceled or delayed due to weather?

Firing Vasu Raja doesn't fix these things. That's why the real story is much more nuanced than "American's NDC strategy failed."

The truth is American tried to do two very different things at once. They began openly thumbing their noses at their corporate customers, believing that they could win with just business that comes direct. But at the same time, they aggressively pursued an NDC agenda to make the experience for those who DON'T book direct better. When we conflate these two very different initiatives, we miss important points.

Yes, by all accounts American was wrong to believe that they could alienate large corporates. But they were RIGHT to believe that third-party sellers have to move off legacy distribution technology to deliver the choices, convenience, and servicing capabilities that travelers—especially younger ones—increasingly demand. Even while American was tearing down their sales infrastructure, they were simultaneously investing more time, money, and resources than any other airline into modernizing their ability to sell through third parties. Now that they are trying to make nice, I hope they don't throw the baby out with the bathwater.

I urge American to seize this opportunity to not just rethink what they've done wrong, but also double down on what they've done right. Airline corporate sales philosophies ebb and flow, but technology tends to endure. Long term, if we want TMCs and online booking tools to be relevant, they need to be able to offer the same content, options, and servicing that travelers get on airline websites. NDC can help an airline be able to say to their loyal travelers: You can book however and wherever you want, and you won't get a diminished experience.

I hope AA quickly removes the restriction on AAdvantage for Business points not being able to be earned through TMCs. Next, I'd love them to make NDC tickets fully interoperable, so travelers who book through a corporate booking tool can change on AA-dot-com and then still be able use the tool for viewing, reporting, or subsequent changes.

When used right, NDC creates choice—it doesn't inhibit. American has done some heavy lifting that can serve them well if they keep their heads down and continue iterating, while at the same time re-engaging with the corporate buyers they've left behind.

Scott Kirby, CEO of United Airlines, at Bernstein's 40th Annual Strategic Decisions Conference in response to being asked about changes in corporate travel share in recent months

That's really a question about the distribution strategy. It is at American. And we think the distribution strategy changes at American has had an impact. It's pretty small. If you looked at kind of the margin gap between Delta [and] United on the one hand and American on the other, it's a single-digit percentage of that. I'm not going to list the issues that I think are different and that make a difference, but it wouldn't make the top five of the issues. Not that it's not an issue, but it would not make the top five issues. And we saw market share shifts happening in competitive markets, but then we've seen it for years happening. This is long-term. This goes back a long way. It's not unique to American. We've seen it happening versus Southwest. We see it happening versus the [ultra-low-cost carriers]. We picked up market share really versus everyone. It's not about distribution, or if it is, it's a small part of it.

 American 'Regrets' Distribution Execution, Plans Changes