Thursday, February 22, 2024

American Airlines doubles down its distribution strategy

American Airlines has reiterated its strategy around internet-based channels but added that its wants to bring the travel intermediary channel along with it said a report in Phocuswire.com.

Announcing full-year and fourth quarter 2023 results, the carrier said 80 percent of bookings currently come via internet-based channels, and 65 percent of those come via its own web and mobile channels. After launching its controversial new distribution strategy in April 2023, making some content only available through NDC channels, the company has a goal of reaching 100 percent internet-based bookings.

During the earnings call, chief commercial officer Nasu Raja said the airline’s “best content, lowest cost and best servicing” comes via the internet and that the company plans to “lean further into” the strategy with the carrier encouraged by the results so far.

“What we have realized through this is, first and foremost, we need to make it easy for customers to consume content through the internet. We’re going to offer more mileage for customers who shop through the internet. We’re going to roll out better servicing capabilities for internet distribution, and we’re going to start restricting the amount of selling and servicing we do through non-internet based channels. And we invite all the travel mangers and travel agencies in the world to join us in this. It should be great for customers, great for [travel managers and agencies] too, and all our financial incentives targeted to that audience are around helping this shift.”

He shared that business travel was back 90 percent for the carrier in Q4 with unmanaged business travel bookings outstripping managed business by almost a 3-to-1 ratio.

Raja added that 10 percent of revenue is from customers coming to the airline for a basic economy product but buying more expensive products, which he said is up 25 percent year over year. Almost all of that growth is coming via the website or mobile app.

“We see more and more ways where customers … who are coming for a basic product want more than that, and we can go and deliver that to them, which is why so many of our distribution strategies, far from being risky, we see as a great opportunity,” he said.

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