American Airlines Declares War on Third Party Travel Agents – Are We in the Crosshairs?

By Robert McGarvey

Effective May 1, if you want to earn frequent flier miles with American AIrlines, you must purchase tickets via the airline directly or from “preferred” third party travel agencies and websites which have yet to be named, presumably because American is trying to hammer out deals that benefit it the most. The list, supposedly, will be revealed in late April.

Miles will be awarded on Basic Economy fares only when booked via American or partner operators. No third party agency bookings qualify.

Travel agents predictably are a -flutter. “This latest development doubles down on American Airlines’ clear disregard for the travel agencies that distribute its service,” wrote American Society of Travel Advisors CEO Zane Kerby.

What about passengers? Are you applauding these changes? American believes you should.  “We want to make it more convenient for customers to enjoy the value and magic of travel,” American Airlines’ chief commercial officer Vasu Raja said in a statement. “Not only does booking directly with American provide the best possible experience, it’s also where we offer the best fares and it’s most rewarding for our AAdvantage members.”

I can’t speak for you but I don’t experience the “magic of travel” when making a few clicks on an airline website. I have no idea what Raja is saying here and rather doubt he does either.

Strange American’s explanation for the changes may be, they still may stick. American is unconcerned with travel agent ire, no matter how loud it gets. Assuming American can weather the passenger pushback against these changes (and I believe it can), Delta and United will quickly do likewise because the carriers are in a monkey see, monkey do business.  The other two surely like American’s gambit and if the water looks safe they’ll jump in.

Should we be rushing to man the barricades against these changes?

I am a North Jersey guy, a good brawl is always an appealing idea – but I don’t like to engage in sure loser fights and that’s what this is.

Little by little, airlines have been tweaking frequent flier programs to benefit them (and in a zero sum game that means we are losers).  

So too are travel agents and the first salvo in the airline war on them goes back almost 30 years, to 1995, when Delta sliced its commission payments from 10% to 5.  Now some airlines pay exactly zero and just about all have reduced or even eliminated any support services for travel agents.  That’s why some travel agents will book air only if paid a fee by the customer and it’s hard to blame them.

Hotels, meantime, have been at war over travel agent commissions for years – some simply refuse to deal with OTAs, online travel agents such as Expedia.  The hotels want to keep the money in their pockets.

Which brings us back to frequent flier miles which of course airlines see as a cash equivalent and therefore they want to maximize their control of it. So American is waving a cudgel, insisting that if we want miles (and they know we do), we’ll book with American or a “preferred” third party and those who play the miles game will go along with this rule change.

Some very occasional fliers may not, simply because they don’t know about it.

But most of us will shrug, grumble and play by the airlines’ new rules. That’s what we’ve done in the past when, for instance, we accepted the much more monumental shift of rewards flights to “dynamic pricing,” meaning what the market will bear.

We’ll do it again with this attempt by American to direct bookings into its own channels and those that benefit it the most.

Personally, I don’t much care.  For some years most of my flight bookings have been direct with the carrier anyway (except for a handful booked via Amex).  It’s just been more convenient for me to center every detail of a flight in the carrier’s mobile app.

Meantime, I’ll be bracing myself for still more erosion in the value of miles.

But, hey, at least we’ll get to experience that “magic of travel.” That’s what Raja said.