American tightens mileage earning rules to motivate NDC, direct bookings

American
Airlines is changing its rules for earning AAdvantage frequent flyer miles, a
move that will reward consumers who book directly on its website and those who book through agencies that have a new distribution capability (NDC) connection. 

Beginning
with tickets issued on May 1, basic economy tickets will earn miles and loyalty points only if they are booked directly with American or with a partner
airline.

For all
other fare classes, bookings can also earn miles or points if booked through a “preferred
travel agency,” or if the company has a corporate contract with American or is enrolled in the AAdvantage Business program.

According to American’s website, the preferred travel agency status is awarded, in part, based on
whether the agency is meeting specified thresholds of an increasing percentage
of bookings going through American’s NDC connection. For the first iteration of
the list, to be released in April, the airline is requiring agencies to have 30%
of their American bookings through NDC, increasing to 50% by October 31 and 70%
by April 30, 2025.

Preferred agencies must also adhere to display criteria beginning July 1.

“For an agency to be considered preferred, they must demonstrate their ability to clearly communicate to customers when they earn AAdvantage miles in the online booking tool throughout the booking flow before a purchase is finalized,” according to American’s website.

The changes are part of the carrier’s
ongoing
strategy to boost its internet-based distribution, both by bringing
customers to its direct channels and by encouraging its retailing partners to
sell only through its NDC connections. During the company’s latest
earnings call in late January it said 80% of bookings currently come via
internet-based channels and it has a goal of reaching 100%.

In a post
on LinkedIn commenting on American’s announcement, Amtrav co-founder and CEO
Jeff Klee wrote, “They [American] have made it very clear that if you are an
intermediary who wants to sell American tickets you’re going to have to do it
with modern technology that allows American to sell the products they want to
sell at the prices they want to sell them at without the artificial constraints
that the old communications protocols impose. That is well within American’s
right, they’ve given intermediaries ample time and warnings, and I don’t think
there is a shred of doubt that sooner-rather-than-later every intermediary, no
matter how big they are today, will be either gone or transacting in modern
ways.”

American’s
announcement regarding basic economy tickets – that they will earn award
points and miles only if booked directly with American or partner airlines – is even
more “interesting and important,” wrote Klee.

While basic
economy tickets are not generally purchased in the corporate market, Klee said
he sees this news as a signal of more changes to come.

“… combined
with other moves from AA like restricting accrual of AAdvantage for Business
points and canceling full content agreements with GDSs (even for NDC via GDS),
it’s hard to believe that American is done. This will sound self-serving, but I
think they’re overplaying their hand with this part of the strategy. For all
the good they are doing in forcing the industry to modernize, I’d bet the loss
from share shift is exceeding and will continue to exceed the gain from channel
shift by corporates who resent being told that they can’t use their booking
channel of choice.

“The NDC vs. EDIFACT debate is getting boring; its
outcome is no longer in doubt. The real intrigue is around the extent to which
airlines will or will not empower TMCs that do use their most modern connection
options to fully serve their mutual customers. I still believe there’s a grand
bargain to be had where airlines, TMC, companies and travelers all benefit. But
for that to be happen, TMCs will have to rethink what it means to be a good
partner; buyers who don’t want their travelers to use different apps for each
supplier will have to make themselves heard; and airlines, quite frankly, will
have to be convinced that bending the distribution system to their liking is
necessary, but breaking it completely will not be in the best interest of their
customers.”