American Airlines plans to begin later this month to distribute optional services to travel agencies and third-party tech providers exclusively through Farelogix.
And, in the future, the airline plans to offer all of its existing and upcoming ancillary services exclusively through AA Direct Connect via subcontractor Farelogix.
That means some 53 travel agencies in North America -- including American Express and Carlson Wagonlit Travel -- would be able to offer their clients American's new Boarding and Flexibility Package because they are tied into the Farelogix FLX distribution platform.
That will provide some differentiation because travel agencies who get their travel content exclusively through Sabre, Amadeus, Worldspan or Galileo won't be able to access the new American optional services for now unless they book it like a consumer would on AA.com or through other airline channels.
American's optional services are now branded Your Choice Services and the first product, unveiled last month, is a Boarding and Flexibility package aimed at nonelite passengers. The offering, which includes priority boarding, a flight change discount and increased standby options, is available in the continental U.S. for $9-$19 one way, depending on the market and routing.
American's distribution of optional services exclusively through Farelogix represents a distribution sea-change for the airline -- but it doesn't mean that GDSs won't eventually be able to get the content.
However, in American's view, if the airline comes to terms commercially with the GDSs in 2011 contract negotiations, then the GDSs would have to connect to a competitor, Farelogix, to access American's optional services.
Cory Garner, American's director of merchandising strategy, says there is a tendency in the marketplace to view American's optional-services distribution strategy "as a temporary negotiating ploy, but this is different."
American has decided to restructure its distribution technology for all partners -- whether they be travel agencies, GDSs or other third-parties -- and will distribute all optional services in the future through AA Direct Connect, Garner says.
So, what's different about American's new distribution approach?
For example, today GDSs take American's fares from ATPCO, access availability data from American, and then the GDSs do their own fare calculations, Garner says.
Under the new system being unveiled, however, American will calculate the fare offers "on our side" and "ship shopping results" to all its partners, Garner says.
"Optional services and fares will all ultimately be returned in the same response," Garner says. "The agency can decide if they want to show total trip costs up front or show only the base fares and then the optional services in a separate step."
American officials say they've made this change in their distribution strategy because of more attractive terms through Farelogix and to enhance the airline's ability to merchandise its offerings.
Alice Curry, American's director of distribution strategy, says the airline will be able to use its new distribution methodology to make personalized offers to travelers based on "the information we know about the customer."
Curry says American will be able to narrow down product offerings to customers to perhaps the two or three that travelers would be most likely to book and the airline or partner would have a better chance of converting the sale.
All major U.S. airlines, as well as Emirates, Lufthansa and Singapore Airlines, are hooked up to Farelogix, and so are 6,500 travel agencies in 63 countries.
It's unclear if other airlines would take a Farelogix-only optional services stance.
But, the issue will be a major one in 2011 GDS negotiations with American and perhaps other carriers.
Sabre spokeswoman Nancy St. Pierre says: "We believe that we can distribute this content for AA in the GDS and we are in discussions with them on that topic."
Garner says American has always reached agreements with GDSs and expects to do so in 2011, as well.
Whether the GDSs agree to tie themselves into Farelogix to access American's optional services remains to be seen.
But, American says the following companies are in various stages of integration development with AA Direct Connect (Farelogix): AgentWare, BookingBuilder Technologies, Cornerstone Information Systems, GDSX, Global Matrix, nuTravel Technology, PASS Consulting, Rearden Commerce, Revelex, Travelfusion, Tripware, Trondent Development, Travel Computer Systems and TRX.
Curry of American declined to name the travel agencies integrated with Farelogix and set up to access the airline's optional services.
Curry said the travel agencies are reluctant to identify themselves out of competitive concerns and "fear of retribution from distribution partners."