American Airlines: “We want the customer to know what the total cost of the trip is”

Cory Garner is the director of distribution strategy for American Airlines. You may have heard about American removing its flights from Orbitz this week and Expedia’s subsequent action to “de-emphasize” American’s fares. I wanted to find out why – and how it might affect customers. Here’s our interview.

Why did you remove your flights from Orbitz?

It’s important for us to be free to customize our product offerings to improve the customer experience, and to distribute our products in a way that doesn’t result in unnecessary costs.

Unfortunately, we were unable to reach an agreement with Orbitz on this point and determined it would be better to part ways, for now. We’re open to talking with them to reach a viable, mutually beneficial agreement and hope to one day return to their site.

How about yesterday’s action by Expedia to de-emphasize your fares?

We’re disappointed that Expedia is making American Airlines flights and fares more difficult to find on its website.

This discriminatory action is unwarranted, especially considering that American has taken no action against [it] and continues to operate in good faith with Expedia.

While tickets for air travel on American remain available for purchase on Expedia, its favoritism toward other airlines’ airfares may lead consumers into believing that they have fewer choices, even in situations where American’s fares are lower, and schedules are superior, than other airlines that are listed first.

Let me get back to Orbitz. Are you saying that the way you were distributing tickets through Orbitz was too expensive and too limiting?

Our desire is to continue distributing American Airlines tickets through travel agencies. We just want them to include new items.

What kind of new items?

What we’re trying to do through what we call Direct Connect provides a level of content, including fares and optional services such as checked baggage. It provides greater transparency at the initial point of sale. It also gives us the ability of tailor the offers on the basis of customers’ needs.

Can you give me an example?

Sure. A family of four traveling on a vacation has very different needs than person traveling on business. The family may be more concerned with full access to overhead bins, food, early boarding – we’d be able to make offers based on their needs.

Contrast that with a business customer. They may be concerned with having onboard connectivity.

With Direct Connect, we’d understand the customer and be able to make that kind of customized offer.

Does Direct Connect allow customers to customize their own fares – in other words, to always choose a fare with a checked bag and a meal – or would it only allow American to do the customization?

Yes, the customer can also drive the customization.

Does Orbitz have access to that information now, and was it unwilling to display it? Or is it incapable of displaying it?

Orbitz could have that access now by signing up for our Direct Connect – something that have not agreed to.

Alright. But don’t the various customers with different needs have one thing in common — that they want to know how much they’re spending for their ticket up front?

Yes. Direct Connect would allow us to do that.

What’s wrong with the way things are being done now?

The Global Distribution Services, or GDSs, were built in the 70s and 80s. We needed central clearinghouses to install lines to travel agencies in order to access our inventory.

It rewarded GDS as status as gatekeepers. Now, with the advent of the Internet, the GDSs’ status as gatekeepers are being challenged. We don’t view them as a necessary component to facilitate a connection to travel agent.

It’s my understanding that the GDSs have created a system that allows them to handle the kind of customization that you’re talking about. The systems also exist to send this data to agents through the Airline Tariff Publishing Company. How do these systems differ from Direct Connect?

They are not able to provide the type of customization we’re talking about becaused it would be based upon proprietary customer data that the airline has.

What are some of the benefits of Direct Connect to consumers?

The best way to see that is on our website, AA.com, which is a direct-to-customer distribution channel.

We have the ability to customize fares and offer products and services that we didn’t otherwise offer to a travel agency.

There’s been a gap between what we can offer through AA.com and through agencies, and that’s what we’re trying to address.

You had mentioned an all-in price. But when I go to AA.com, I don’t get an all-in price up front, yet.

That’s a work in progress. It’s something we started when we created something called a boarding and flexibility option, which we introduced in June.

It was the first time we started to price these services up front. Our approach is to make this a multi-channel launch through various services. We want travel agencies to participate.

Can you show me an example of the kind of customization you’re talking about on AA.com?

The boarding and flexibility package is just such an example. It is targeted at non-elites, who otherwise would not have the ability to stand by for an earlier flight or board in an earlier group.

Are you saying that Direct Connect is a work in progress? If that’s the case, then why is it being introduced now?

No. It will however, require some changes on the agency side to intergrate into their current system. We have been publicly discussing our plans to offer Direct Connect for some time in order to help the market prepare.

Critics have said that Direct Connect would make a side-by-side fare comparison between airlines more difficult. Is that true?

If we’re talking about a travel agency scenario, agents have difficult decisions to make when it comes to their fare displays.

When you have access to AA’s optional services, we’d have a difficult time making a comparison.

It’s going to be the online travel agency that decides whether it makes sense to display a full price at the beginning or the end of the booking path. It’s not a decision we’re going to enforce on the agency.

We just want to display the full range of products and services. We want the customer to know what the total cost of the trip is. We want to compete on service, versus price.

Wow, that’s something you don’t hear from an airline often. Are there any specific customer services are you planning on implementing?

There are range of offers we’re considering, the priority boarding and flexibility package is one example – others will come in the future and we would rather not tip off our competitors as to our plans.

Who is using Direct Connect?

There agencies in Asia, North America, Europe, and soon to come, Latin America. It’s agencies of all types.

Can you name names?

We’d like to disclose them, but we want them to choose the time and place to announce it.

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