DALLAS -- American Airlines, fighting to regain corporate and travel agency-generated market share, has reassembled its global sales division.
The carrier will also resume a popular corporate perks program on Oct. 10 and said it has extended an incentive program for NDC-enabled sales through the end of the year.
Scott Laurence
"We understand that in order to be competitive we're going to have to have a robust sales offering," said Scott Laurence, American's vice president of partnerships and retailing, during an interview at the airline's headquarters near Dallas Fort Worth Airport. "That means that we're going to have to have an organization that allows us to be competitive, which means a larger empowered organization."
American gutted its corporate sales division in
September 2023 and folded much of what remained into other parts of the company. The cost-cutting move was part of the airline's failed 13-month experiment with pulling back from travel agency channels as it attempted to drive more direct and NDC-enabled bookings. American abandoned that strategy in May.
Laurence leads the revamped division with close involvement from the head of American's commercial organization, chief strategy officer Steve Johnson. Kyle Mabry and Jim Carter, two former American sales executives who were pushed out during the 2023 restructuring, have been brought back as consultants.
Laurence said that since late May, American has increased its account manager headcount by 20% and added 79 sales-support staff. Hiring continues, with 30 to 50 more sales-support personnel still to be added.
When the division has been fully reassembled, Laurence said, it will likely remain smaller than American's prepandemic corporate sales unit but will look similar in many ways to the sales divisions of other large network carriers.
During American's Q2 earnings call, CEO Robert Isom estimated that the jettisoned strategy to shun travel agencies would cost the airline $1.5 billion in revenue this year, including $750 million during the second half. Laurence declined to be specific about whether revenue estimates have spiked since then as the carrier works to win back lost corporate share from Delta, United, Southwest and others.
"I continue to be encouraged by our progress," he said. "But the numbers that we discussed on our earnings call, they're large numbers, and we continue to have our work cut out for us."
American's about-face
On Oct. 10, American will bring back its Corporate Experience benefits program, which had been eliminated in April as the airline pursued its pullback from travel agency channels. With the program's resumption, American customers flying as part of an active corporate contract will once again be able to select preferred economy seats free of charge; receive priority check-in, security screening and boarding; and receive higher priority flight re-accommodation when operations are disrupted.
The move is the latest reversal of a measure the carrier put in place as part of the distribution strategy to drive more direct business.
In July, the AAdvantage Business incentive program for small and midsize companies began awarding miles and loyalty points for bookings made via travel agencies, rather than only for direct bookings, ending a policy that had been in place since last October, when American rebranded its Business Extra program as AAdvantage Business.
The airline has also returned all but its basic economy fares to legacy GDSs after having removed more than 50% of content over the course of 2023.
American also decided on Oct. 1 to extend its 10% commission program for NDC-enabled bookings through the end of the year. The program, which was put in place in June, had been slated to end on Sept. 30.
Ultimately, Laurence said, the best way to drive NDC bookings is by offering continuously priced dynamic fares, a process that is already being deployed by United.
Legacy GDSs, which rely on the alphabet-based booking codes that are familiar to travel advisors, cannot support continuous price points, but NDC can.
"Continuous pricing is where the industry is going, and it creates a great incentive to utilize NDC," Laurence said. "It's great for customers. They see the lowest fares. It is hard to look at that and not think it has potential to be a really effective product for American."
The airline, Laurence added, is experimenting with continuous pricing, though he declined to provide details.
He said travel advisors can expect more agency-friendly announcements from American soon.
Corrections: Consultant Kyle Mabry was identified with an incorrect first name in a previous version of this report.