American Airlines pushed travel agents to book direct, then reset after Q2 profit fell 46%

American Airlines in 2024 pursued a strategy of making customers buy tickets directly rather than through booking agencies. Fortune reported it alienated corporate customers and travel agents. The American Society of Travel Advisors called it arrogant to assume all customers prefer to buy directly through AA.com, and compared the claim that consumers asked for NDC bookings to Apple claiming consumers asked for no wall charger.

The airline's chief commercial officer, Vasu Raja, was ousted in spring 2024. Bloomberg noted complaints that American's internal technology was not developed enough to handle the change. At a conference in late May, CEO Robert Isom said, "we dug ourselves a hole in the second quarter" and that American had "moved faster than we should have" and did not execute well, calling for a reset.

On the July 25, 2024 earnings call, Isom said revenue performance was not where the airline wanted it. Second-quarter net income was down 46% to $717 million from a year earlier, though revenue was a record. He attributed part of the shortfall to an industrywide imbalance in domestic supply and demand and part to the former sales strategy, adding that a reset would take time.

American moved to steer sales to its own channels faster than the airline's technology and customers could handle, according to complaints Bloomberg cited.

Corporate customers and travel agencies were alienated by the push toward direct and NDC bookings.

The airline's CEO acknowledged it moved faster than it should have and did not execute well.

An industrywide imbalance in domestic supply and demand worsened the effect, the CEO said.

Moving distribution faster than your systems and customers can handle puts your most valuable accounts at risk. Corporate buyers are slow to forgive a channel shock.

American walked back the strategy and said it would work to repair relationships; Isom said he had spoken to more than 30 corporate customers. A TD Cowen analyst told Bloomberg Television that turning things around would take at least 18 months to two years.