Webinar: A Time for Change

First, thank you to all who attended, and to our esteemed panel: Kim Hamer of Results Plus Consulting, Cory Garner of Garner Advisory, and our own Jeff Klee of AmTrav.

Second, we didn't get to questions about consolidation in managed travel with the acquisition of Direct Travel by Spotnana-backer Madrona and the proposed acquisition of CWT by Amex GBT, see the bottom (below the transcript) for our panelists' Q&A on those questions.

Transcript:

Elliott McNamee
Hello and welcome. My name is Elliott McNamee with AmTrav Corporate Travel. I am thrilled to be joined here by an esteemed panel as we talk about “A Time for Change in Managed Travel.” Sometimes we go with more specific webinar titles, sometimes we need a big title for a big topic. Thank you all for joining. 

I'm going to introduce two of these folks and then the third expert, Kim, can introduce herself. Today I'm joined by Cory Garner, CEO of Garner Advisory and, Cory, can we just say the most respected voice on airline distribution in America?

Cory Garner
That sounds like too much responsibility, can somebody else take that title?

Elliott McNamee
That is a lot of responsibility, but somebody has to do it. Cory also led American’s NDC program, started it up and led it for many years. 

We’re also joined by AmTrav CEO Jeff Klee. 48% of AmTrav’s air bookings go through NDC, so we would argue that AmTrav knows a lot about NDC and air distribution, we’re always happy to talk about that and educate folks on that. Jeff is the key to AmTrav’s leadership on NDC.

See Jeff's keynote at the Beat Live 2023.

We're also joined by Kim Hamer, BTN 2022 Travel Manager of the Year, one of the most respected voices in the industry. Kim's gonna bring a buyer perspective to today’s discussion. Kim, would you share a little more about yourself and your background?

Kim Hamer
Thanks, Elliott. Really happy to be here today. I've been in the business for longer than I care to admit, more than 20 years on the buyer side, at least five years on the consulting side and about 10 years on the TMC side working for mega TMC. So, super happy to be with this esteemed panel today talking about some of the things that I’m most about. I'm now with Results Plus Consulting, working with clients to help them innovate through this very challenging ecosystem that we have in today's market, and also part of the Garner network. So thanks for having me. 

Elliott McNamee
Awesome. You and Louise Miller teamed up?

Kim Hamer
We did. Very exciting for us. Yeah, a lot. of experience with her. 

Elliott McNamee

Awesome and thank you, Kim.

So sometimes we share a little about who's here today. Hundreds of attendees we can see, 30% non-buyer, then a good mix of spend ranges for buyers. We don't take a 101 approach here but if you've got questions afterwards, reach out, we are happy to answer them. This is kind of a 400 level class. We'll try to we'll try for 200. If your name is Mark, Michelle, Lisa, Jeff, Lisa, Amanda then you have one of the more popular names here. 

What we're discussing here today: a series of things. Delta's NDC program was announced last week. American Airlines AAdvantage earnings are changing soon, although that changed from next week to “soon,” and we'll update you on that, we just got some news about that today. Corporate direct is in the news following on AAdvantage, and then managed travel consolidation. 

One of our values here at AmTrav is that we are radically honest, that's why we talk about this stuff. We tell it like it is, hear it how it is, that's how we build trust with you. So we will share what we can, won't share what we can't share, and we'll try not to speculate about what we don't know. 

Delta Air Lines NDC Announcement

So, Jeff, what was announced last week by Delta?

Jeff Klee
Delta, the big, long awaited announcement about what they plan to do with NDC. If you look at a page like this slide, they've been the one that's been missing. They've been relatively quiet on NDC for a long time. But I think it's fair to say they have been thinking about it, which they've been doing behind the scenes for at least a year, a year and a half. They've been in this process gathering a lot of feedback. They've spent a lot of time with TMC and partners like us, but also lots of others, certainly not just AmTrav. They’ve been asking questions, diving really deep into our processes and what works, what doesn't work. 

What they're trying to do, which is awesome if they can pull it off, is come out with – and they don’t even like to call it NDC, though it will use the NDC schema, they’re calling it ‘selling and servicing,’ just a more modern way for third party distribution – their goal, without putting words in their mouth, they're trying to basically recreate everything that is in their direct experience. The same content, the same fare brands, the same choices, the same functionality around servicing, offer that in third party channels. It’s a really ambitious goal, it's a really exciting goal, and I'm certainly rooting for them. They've taken a very long, thoughtful approach. 

And now they're starting to announce some technology partners. They're going to work with Accelya, they're going to work with Google, but they're also going to do things, in their words, they’re not going to take out of the box solutions. They're gonna try to really build up a connectivity method that is different, and they're aiming really high. So I give them tons of credit, I'm excited to follow their journey and I can't wait until we can get access to this.

Elliott McNamee
Real quick. They announced that they're going to be 21.3, I think. There's always discussion of ‘is NDC really a standard?’ Now this is going to be a different one, not 17.2. Jeff, does this scare you personally that they're going to be on 21.3?

Jeff Klee
The thing that made me most happy in their announcement: they said that they're going to use 21.3, but whatever schema they use, they're not going to let that limit what they can do. I've been very vocal about this: the most frustrating thing is when I hear ‘oh, we can offer this functionality because the schema doesn't support it.’ And the schema should not be a limiting factor. It's relatively easy for whoever consumes this schema to map to any sort of augmentation or permutation that’s needed, it's much more important that we get the full breadth of content and functionality than that it exactly matches the schema that some other airlines have. So I applaud Delta for that stance.

Elliott McNamee
Cory, you've shared your thoughts on various airlines distribution strategies before. This is the fourth of the four largest US airlines. What's your take on Delta NDC?

Cory Garner
I think all airlines, including each of the big three US carriers, are doing what's logical for the race that they're running and how they've chosen to run it. And so in Delta's case I think it's completely logical what they've decided to do here. On the one hand, they know that two of their competitors have already moved forward with NDC integrations. American has three with each of the three major GDSs, United has two live with Sabre and Amadeus and Travelport forthcoming anytime now. And when your two biggest competitors have those NDC integrations already in place, and because of that they have the ability to do continuous pricing – now United's been more forthcoming about the continuous pricing work they've been doing than American has – that should that should give rise to concern to any airline RM team to know that your two biggest competitors have a pricing capability that you don't have. And so, to me, I'd speculate that that was probably one of the big drivers for Delta to get moving on their NDC strategy. 

It makes sense to me as well that they're approach to NDC would be much softer touch and focus mainly on value-add things that they can add on top of what they used to provide through the GDSs while maintaining as much in the GDSs as they had before. And time will tell whether that actually results in fast take up of their NDC solution or not. I'd say that the industry record is at best spotty when it comes to airlines that have a strictly value-add approach to their NDC strategy. It's hard to work your way up the priority ladder of GDSs and booking tools and all of the other third parties that also have to update their tools for NDC for the whole thing to work. So whereas it can be something that somebody like Jeff Klee would like a lot because Jeff Klee has an NDC-first approach to his business anyway – if you offer NDC and it's got something additional in NDC that the GDS doesn’t have, Jeff's gonna be the first one in line to say ‘yes’ – I'm not surprised to hear Jeff’s compliments for the strategy. 

I'm also not surprised to see Delta’s selection of vendor with Accelya. Accelya is used by American, Accelya is used by United, everybody in this market is already connected with Accelya. So if you know that you might have a little bit of a difficult path to getting universal NDC adoption because of the relative softness of your strategy, you want to at least use the tool that's easiest for everybody to integrate with. So it makes complete sense to me. And you know, you have to give them credit for making the obvious choice in the situation they’re in.

Elliott McNamee
Kim, can you share your take?

Kim Hamer
Yeah, I wasn't there for the announcement, but just in what I've read and what I'm hearing, I would say that Delta, typical to their approach overall, they're taking a customer-centric focus. So working with TMCs, working with the corporate customers, how are they going to make this beneficial and what additional value-added products and services are they going to bring to the table. And so I think from that viewpoint, it's going to be interesting to see, but it’s something that we wouldn't expect to be different from how Delta has approached other entries or changes in the market.

Elliott McNamee
If you had a magic wand, or if somebody at Delta was asking your opinion (which of course they should and I'm sure they have), what about NDC or what advice on NDC would you give Delta from your perspective?

Kim Hamer
I think from a buyer’s point of view, and what we hear and see from buyers, they're looking for ways to continue from a serviceability standpoint, to have serviceability in both directions. So where you're looking at the capability on both the airline direct and the TMC side, and that the TMCs have access to all bookings, whether they were made direct channel through .com or the app, or made through the TMC, the NDC pipe. So I think either way, having access to that information is going to be a critical point for corporates and making sure that they can capture that spend that they have access to it from the whole spectrum: from a risk management perspective, from a data perspective, to be able to monitor and manage the agreements that they may have with Delta, to ensure that they're delivering on their contractual obligations. Those are the types of things that I think are going to be most important for them and then really understanding their corporate customer, and what additional value can they bring from a product perspective. Are there specific bundles that appeal to that corporate set of travelers that they can bring into that program via the NDC pipe to make it really valuable?

Elliott McNamee  
That ability, direct and indirect, that is something that we're already seeing: Southwest has a capability to update the TMC on changes made directly via their direct connection. United has the same ability. I remember when Jeff went and looked at a United NDC booking and said ‘hey, where did this bag come from?’ because the baggage had been added on united.com And you can see that through NDC, so you can get that source of truth. 

Question for whomever, I thought this was interesting, and might maybe there'll be some disagreement on this. Ben asks: “What did we do wrong as an industry?” Kind of a big question. “What did we do wrong as an industry to not align our actions and work together on NDC? What blockers, if any, aren't discussed?” Kim, we'll start with you. Where did we go wrong? 

Kim Hamer
That's a loaded question – thanks for that. Any time you go through a big change like this, there are always going to be you know, a ‘hindsight is 2020’ type of view. And from that perspective, I really don't think that there was much that we could have done to try and prepare the industry, because we've been talking about this for well over a decade. So from that perspective, look, I think we did what we needed to do. Where I think we could improve upon things like this is: there are new ways of working in this industry. And I think it's really incumbent on us to find ways to continue to automate. We went through a devastating pandemic. And from there, you know, we were able to emerge, but I don't think that we've all completely embraced the change that needs to happen. So when you think about, whether it's NDC, additional automation because of resource constraints, AI or generative AI – we need to embrace that change more often and more frequently, to make sure that we are all moving through this faster than we are today. And that, at the end of the day, we’re giving the people that we all care the most about – which is the traveler – a positive experience and one that is somewhat similar to what they're experiencing on the consumer side.

Elliott McNamee  
Jeff, Cory, where did we go wrong?

Jeff Klee
I could jump in here. I don't remember the exact question but it was ‘where do we go wrong in trying to align our views and work together.’ I think where we went wrong is trying to align our views and work together! 

I think that the problem with NDC is that we spent 10 years with a bunch of people in the room who didn't really want to solve the problem – and didn't have the technical wherewithal to solve it, even if they did. And I think when you've got tons of different agendas here, and while I think we've made a lot of progress, mostly thanks to American, in aligning those agendas, that hasn't been the case for most of the NDC journey. And I mean, you've got airlines that have different views on what they really want indirect distribution to be. TMCs have different views on whether they want to keep the status quo or move on from it, and then there's a lot of commercial factors there. 

So I think if anything like this, where you're trying to do something new and different and better, a much better approach would have been and still can be, is where you get an airline and a technology partner (and maybe the technology partner is the TMC or maybe there's someone in the middle), and you just get together and you do something really cool and you show the industry: ‘Hey, here's what we can do, here's what's possible, here's how we can add value.’ And then that can become a standard if it's good enough and people want it enough. We put the cart way before the horse by spending like 10 years trying to argue over the XML schema when nobody was seeing anything get done that added value. So if it were up to me, I had to go back in time, I would have argued for a very different approach to how we go forward with this.

Cory Garner
Jeff, let's imagine – and let me play moderator here for a second – let's imagine Delta's NDC API is totally done. It's got all the bells and whistles that they promise, and they show up at your doorstep tomorrow and say I want to start an integration. Is there anything at all blocking you from doing that? No. 

Part of the original question was, ‘what are the blockers?’ What were the blockers that caused all this to happen? First and foremost, not everybody has blockers. So I disagree with the premise of the question that there were blockers for everybody universally. There are definitely blockers for some, but not for others. If you're a TMC like AmTrav and you control all of your own technology, and you control your architecture, and you decided you were going to lean in to NDC from the very beginning and you made the changes to your commercial model as well that you needed to make that a profitable endeavor for you – there are no blockers for anybody who leaned in and actually made the investment. 

However, if you're in a different camp as a TMC and you architected your entire business around, not your own architecture, but third-party architecture top to bottom, GDS. Guess what: TMCs don’t own GDSs, or OBTs until recently, and they definitely don’t own the OBT that’s most popular in this market. And by the way, there are many more technologies beyond the GDS and OBT that TMCs use that they also don't own and they also don't control. So right there by itself is a giant blocker when you don't control your own destiny on your own tech stack. You're dependent on everybody else's opinion of the world as to whether this is a good idea or not. You're dependent upon them, doing all the development on each airline all at the same time, all on the same schedule, on the same roadmap, and you're hoping they're all done at the same time and in a timeframe that's acceptable to your customers. 

Guess what? It's not going to work, that's never gonna work. And we haven't gotten into operational processes that have to change. No matter what you do with your NDC API as an airline, the way NDC APIs work is different from the way EDIFACT APIs work. And those differences require a change management exercise of its own. You got to go change your processes and guess what now you change your processes. What else do you have to do? You have to train your people. Your people have been around for 40 years using green screens and EDIFACT processes , now I have to use this other thing and this other process, and everybody throws a fit over it. 

That's the problem. And by the way, I haven't even mentioned the incentives yet. If you're a big TMC and you're making $4 a segment from your GDS, are you gonna go rushing into an architecture where you're not going to make $4 a segment and you have to retrain all your people, and you have to change out all of your own tech stack and either acquire or develop your own? Who has the money and time to do that? You're never going to do that. Those are the blockers. So it's not about ‘this person's evil and this person's good.’ Everybody in this industry is a logical person being objective and are faced with the circumstances they're faced with and they make the best decision they can. The blockers are how the industry was constructed from the beginning, and NDC did not fit the existing industry structure, period. And that's why it's a blocker for some and for others.

Elliott McNamee
So before we move on to AAdvantage, real quick, Jeff: Jody asks if there's a difference between NDC direct versus NDC through the GDS, and Company Dime just published an interview with somebody weighing in on this. You've got a unique perspective since you can see it through the GDS and directly. Is there a difference between those two?

Jeff Klee
Short answer is ‘yes.’ I think the industry would be much better off if we get to a point where the answer is ‘no.’ And I say this all the time, I really mean it sincerely: I root for the GDSs to get NDC right because I think that, in order to support (to Cory’s point) a critical mass of enough intermediaries to be able to survive and compete to make this ecosystem work, they need effective GDSs. The problem is that the GDSs – there’s two problems. One is they try to shoehorn NDC content through old workflows when they really should start over. I can talk for hours about this, but to Cory’s point, we need to reinvent processes and workflows to fit NDC, not trying to make NDC fit the old ways that we used to do things. 

But the other, more immediate issue is that we at AmTrav can develop much more quickly than the GDSs, not because we're better developers, but because we're more focused. For instance we had American NDC in 2019, four years before any GDS. And things like being able to have multiple passengers in a PNR or being able to exchange an unused ticket or exchange EDIFACT ticket for NDC – these are all things that we quickly built when they became available. And the GDSs, you have to wait for development cycle after development cycle. Now in fairness, some GDSs Finnair content way before we do, but we're able to focus on exactly what's important to our customers, and our customers happened to be largely US-based, so for any US airline, we're all-in and we're going to develop as soon as an enhancement or a capability becomes available. That's a top priority for us, but it's not a top priority for a GDS because they're trying to juggle thousands of top priorities. 

So I think right now without a doubt, if you have a booking tool or TMC that is directly connected to an airline that's important to you, you're going to get a much better experience than you will through a GDS. Maybe that will change someday, I hope it does, I'm moderately optimistic at this point.

Cory Garner
I'll add one thing to that, which is maybe a scary thought – maybe people tuned in for scary thoughts. Jeff said that he's had American NDC content since 2019. NDC predates 2019 by more than a decade as well. All these GDS integrations that are still going on, these have been going on for a year, multiple years. In some cases, five years or more. And not my numbers, but Kurt Ekert’s numbers, CEO of Sabre, said on its last earnings call that GDS NDC transactions are 1% of the total. 

This is not this is not a government-funded effort where the road construction can get done at some point and two decades from now. These are all for-profit companies that have to allocate capital and resources and time against projects that actually turn an ROI. And a five year integration, a set of five year integrations that produce 1% of the total volume, that wasn't in anybody's financial models when they started that integration in terms of ROI. The world is not going to sit around and wait for GDSs to continue to cram NDC content in the EDIFACT box. I'm sorry, you're not going to hear a lot of airlines talking about this, but I'll tell you right now I consult with airlines all the time, what I tell them is: you need to think twice about trying to cram NDC into that EDIFACT box anymore because it's a road to perdition in some cases. And that's even more true for the middle tier and the small tier airlines out there that are never going to float high enough on the priority list. So in my view the world should not sit around and just assume that all these GDS-NDC integrations are going to be fully completed at some point and they'll just continue in that direction until they're 100% complete. I think the plug will get pulled.

Elliott McNamee  
All right. We have thoroughly covered NDC but of course there's more. 

AAdvantage earnings changes

So American Airlines AAdvantage loyalty program. A year ago this month they removed many of their lowest fares from non-NDC and non-direct channels. AmTrav has tracked those fare differences, so far in 2024 it is 52% of the time we see lower fares through NDC. So 52% of the time a traveler can say ‘I found a lower fare,’ that adds up to 13% savings through NDC. The more recent news is that American announced that only direct channel, ‘preferred agency,’ AAdvantage Business and corporate contracted bookings would earn loyalty points and miles. This news just came out: they are delaying that until this summer. So there is a reprieve on that. But it is still coming. If American has shown anything through this past year and a half it's that they do what they say. 

So with that, loyalty earnings varying by channel. Kim, if you're a buyer, and you don't know if your TMC is a ‘preferred agency,’ what do you do?

Kim Hamer
It's really interesting, and talking to a lot of buyers over the last couple of weeks even, I think there are some temporary options on which to decide for how to manage this process moving forward. If the goal is to keep all of your data within your TMC and they're not a preferred TMC, you can buy yourself a little bit of time with two options. One, if you have a corporate agreement, great, then you can still continue to book through the TMC and earn loyalty points. If you don't have a corporate agreement but you still want to continue to use the TMC then the option is to sign up for AAdvantage Business which is a smaller corporate type of account that will enable you to give yourself a bit more time. I mean, let's be realistic, we don't know how much time that's going to be, it’s really quite surprising that they pushed this to the summer. So does that mean then, in turn, their [NDC booking] thresholds that the TMC is are going to have to achieve to maintain that status will also get pushed out? That will have to be seen, but at least having an AAdvantage Business account will buy you a little bit of time to work with your executive teams, your leadership to see ‘what do we want to do from a strategic standpoint,’ do we need to go direct, are we going to hold firm and stay where we are through the TMC regardless. I would say that [AAdvantage Business or a corporate agreement] is probably the best opportunity for buyers today.

Elliott McNamee
So if you're a buyer and there are questions about whether your TMC is a ‘preferred agency’ and you want your travelers to stay in the program, do you have qualms about signing up for AAdvantaged Business?

Kim Hamer
As a buyer do you have qualms? No, I don't. I don't see why. At the end of the day it's about the traveler experience and making sure that you know you're still, from a trust perspective, you still are gaining that trust. And if travelers can't earn their points by booking through your preferred channels, then you need to look at what the alternatives are and figure out ‘how do I make this work until I can come up with a strategy, either my TMC becomes ‘preferred’ or I accept direct, that direct channel through .com and the app is a preferred channel for me.’

Elliott McNamee
We're getting to that topic (corporate direct) next, but we've got plenty more on AAdvantage. First for Jeff, Bert and Gina both ask when we're going to see NDC regularly available across TMCs and online booking tools. My question for you: have you seen a change since the AAdvantage announcement? Have you seen a change that pushed things along in the TMC market and the online booking tool market? Has the AAdvantage announcement made a difference?

Jeff Klee
I mean, anecdotally just from events when I'm talking to other TMCs, there has been this mad scramble. This was supposed to be the measurement week where American was making sure everyone's at 30% NDC. And I've talked to a lot of people from TMCs who have been, you know, coming up with all kinds of strategies to get above 30% for one day thinking that that might do that the trick, and nobody knew how American was planning to measure it, though I guess now that's been kicked down the road a little while. 

But like I was saying earlier, I give American a lot of credit, because they're whipping people in gear, you know, starting last April and now here, you know, two events, the two big things that American has done, has motivated a lot of people who were not previously motivated to adopt NDC. And I do think in working groups I’m in, we've made a lot of progress: across the industry now you don't have the same debates that you had a year ago about whether or not NDC is a good idea. I think most companies, most TMCs, most GDSs, most technology providers are pretty bought into the idea that even if they don't love it, it's inevitable. It's happening. So let's figure out how to make it work and as best we can. I think there are lots of different approaches. On the implementation, for sure. But I think that, largely thanks to American, the industry has pretty much coalesced around the idea that we have to figure out some way to modernize. Again, I'm not sure everyone's on the right track for how to do that but at least everyone agrees it has to be done.

Elliott McNamee
Kim, another question for you, and this is a big one since we've got you here. It's a really big one. Antoinette asks how travel managers navigate the ‘I found a lower fare issue’ – what's your experience with that, what's your advice?

Kim Hamer
It's real. If you want to earn the trust and keep and maintain the trust of your employees and your travelers, continuous pricing is real. So in my former role I had two preferred channels: the TMC was a preferred channel and United corporate direct was a preferred channel. We did that specifically for a number of reasons, but one was continuous pricing, and so when that happens, you have to decide from your own corporate goals and in your corporate culture, what you're willing to absorb. 

If you have a structured program that is, you know, highly compliant through the TMC and you're getting this but you're probably not losing a lot because your net effective savings rate is much higher, then that's one angle and that's a decision that the company decides to make, right? But you have a lot of other organizations out there that may not have high compliance like that they may not have high net effective savings rates. And so from that perspective, if you just continue to tell them that they have to book through the preferred channel, through the TMC, that's the only way they're going to be able to do it, you are going to lose on I have the lowest fare and people are going to start to go elsewhere. And if you can't control that, then you've got some decisions to make, and I think that goes back to what we were talking about: evaluating what your strategy is going to be. And if you already have leakage, then there are other things that you can do, to pull in those direct bookings into your program so that you can at least manage, monitor and leverage them across the spectrum as part of a managed travel program.

Elliott McNamee
Thank you, Kim. Three questions for you, Cory. Number one, what about booking away from American, does that work?

Cory Garner
I mean, to the extent that that happens, it's probably been happening for a long time. You have to think about all the layers of changes that American has rolled out over the course of the last 18 months. They pull back commissions, they've pulled back discounts, they've implemented a distribution strategy that takes more than 50% of their fares out of the legacy channel. They've implemented this frequent flier differentiation, both in their small business and now in their frequent flier program. There have been a lot of mad people for a really long time. And there's that old phrase: you can only fire me once. You've already been fired by everybody who can fire you. I mean, who's left to fire you anymore? At some point you're playing with house money when it comes to revenue risk. I think maybe the situation is gonna look probably look a little bit different in the first quarter of this year as it looks like other airlines are seeing more corporate comeback, and that might reveal a little bit more of the impact that American has been seeing in the corporate space, but at some point you've already taken all the risks gonna take and if you're, if your public actions are to continue to double down and double down and double down, it's a clear signal that you [American] feel like the incremental risk is smaller than it used to be.

Elliott McNamee
Which takes us to our second question. Several commentators, Cranky Flier, for example, have made the case that American strategy is doing more harm than good. What do you make of that? Are commentators missing something, are they measuring this in a different way than American is measuring it?

Cory Garner
You know, you see what you want to see the numbers, right. Somebody like me might want to not see the corporate impact in the numbers. Other people like Cranky Flier, who are GDS subscribers and use the GDS as part of their business, might be more upset that American has a strategy that has hurt them and maybe you'd be more prone to see something else in the same numbers. So I think it's ‘beauty is in the eye of the beholder.’ And you know, I suppose ugliness is in the eye of the beholder as well.

Elliott McNamee
Last question on AAdvantage. Yesterday you made this point, thought it was interesting. Is the AAdvantage change aimed at business travel or leisure travel? And what do credit cards have to do with it?

Cory Garner
So empirically speaking, if you look at the strategy that American is rolling out, there's three ways to earn the same frequent flier benefits that you were before. One is direct channels, two is preferred travel agencies, and three is, even if you're not using a direct channel or preferred travel agency, if you're on some kind of corporate program with American, a discount program, or the AAdvantage Business program, which you can sign up for in five minutes and it's free – you're not touched at all. 

And so it's actually been a little bit peculiar to me to watch the corporate market have such a flurry of activity around it, considering that there is a really easy get-out-of-jail-free card associated with this strategy. Could they change their strategy down the road and put even more pressure on the corporate market? Absolutely. Who knows when that could be. 

But on the leisure side, it's pretty clear to me that this is more of a leisure strategy than it is a corporate strategy at this point, because if you hit the leisure channels, they don't have the corporate program get-out-of-jail-free card. If you're a leisure-oriented agency, be that an OTA or brick and mortar, you've got to be a preferred travel agency or no dice. And so the OTAs in the U.S. have been doing NDC for a long time, I don't think this really affects them. 

So now you're getting even more narrow down to who are the leisure agencies that are not OTAs, and some of the bigger ones are actually credit card fulfillment houses. So the agencies that sit behind competing loyalty programs [competing with AAdvantage and AAdvantage co-branded cards], like Chase or Amex TLS, or somebody like that those types of agencies present different kinds of strategic threats to an airline, because not only are they a third-party channel that isn't using the best technology and not displaying your product the right way, and maybe you don't like the economics either. But on top of that, they're presenting a competing card product and they're using your flight network to support their competing card product. And in today's world where an airline can earn 10 cents from their loyalty program on top of the dollar that they make from someone to fly, that's a bigger and bigger issue for an airline to grapple with strategically.

Elliott McNamee
Not a scary opinion, but a very insightful one that you may not have heard before. I tried to launch a poll to see if people showed up to AmTrav webinars for scary opinions, but it didn't work. So my apologies and you'll just have to raise your hand behind the safety of your own computer screen or put it in the Q&A. I don't know. All right, moving on. 

Corporate direct (sometimes called multichannel or omnichannel)

So we've mentioned corporate direct a few times. When we talk about corporate direct, we mean for example Concur TripLink that allows you to go to United.com or American.com, I don't think Southwest is in there, I think Delta is in there. Forgive me for not knowing offhand. Traverse has a network in the US, amongst others, allowing corporate travelers to go and book with their discounts. There's security around who can access it, there's a secure form of payment, and then the data can also be sent back. This is a big deal. It is becoming more of a big deal. Airlines are big fans of this because they like direct channel bookings. AAdvantage Business is a big example of this. 

Kim, if you're taking a strategic look at your corporate travel program, is multichannel an option for your program.

Kim Hamer
Absolutely. I think again, it goes back to taking a look at what are your corporate goals and do they align with having a multichannel strategy, but directionally this is a path that the industry is going down and I think that there's enough business and enough justification and how people want to work to be able to open up multichannel to allow that to happen. You have frequent travelers that did that perform a lot of changes or kind of manage multichannel on their own today, right? They're already making changes through direct channels. So opening [your program] up to allow them to make those initial purchases, but still capture things for risk or data for whatever purpose is fantastic. It's a change management process to advise them how to make that happen. But I think it absolutely can and I think there are arguments where it should happen. Right? 

For where I was previously, it was strategically the right direction for us to go in, it was something that we really thought opened up some doors and provided some additional benefits. And oh, by the way, you know, executives were coming back to us and saying “how do we do more of this, we want to do more of this with our strategic partners.” So I think you have to evaluate where your company is and what your propensity is for, you know, opening additional doors and giving yourselves a multichannel environment – but it's absolutely doable. And, you know, the benefits can play out in your favor, where you start to build that trust with your people again.

Elliott McNamee
What are the ingredients for a successful corporate direct program? And actually, Jeff asked in the Q&A, what is corporate direct? But starting with: what are the ingredients that you need? What does that roadmap look like besides hiring Results Plus Consulting because they will get in with you and hold your hand and convince your executives as you make this happen?

Kim Hamer
Start there, thanks. From a from a multi-channel perspective, I think it is it's working with your partners to really understand directionally – you mentioned a couple of providers out there, whether it's Traxo or Traverse or Captrav, some of them can really help you from a profile and policy perspective, or just capturing those bookings that are going outside of a TMC preferred channel to a direct preferred channel. That said, there’s also a supply perspective, the suppliers are working with the corporates, or at least we're seeing a lot more collaboration. It'll be interesting to see what happens with Delta and how they address this, but some of these carriers are more than willing to provide data feeds, data feeds for security for example. Those things are available to you, and if it's not direct from the carrier then through a third party, and that still enables you to manage your program like you would in a normal environment where maybe you have a single [TMC] preferred channel. So I would say there are absolutely benefits and it's weighing how to build those benefits in and make them work for your preferred channel, then working with your suppliers to help you build that business case to justify it internally.

Elliott McNamee
Now, let's say either you go through that process, or it's a non-starter, so corporate direct isn't an answer for your company. What do you do?

Kim Hamer 
Yeah, in that position, I think it's more of a top down environment where you have to have the executive level support to say directionally “This is the strategy that we're embracing.” And “this is how we want to act, and this is what we're expecting of you, this is how you have to travel for us to go out and drive additional revenue.” “We want you to do it in this manner.”

Elliott McNamee
Now, Cory, you might disagree with that – is corporate direct, optional? Or not?

Cory Garner
Everything's optional. But just because it's an option doesn't mean it's a good or a bad idea. I think the world – when I speak to corporate clients these days, I tell them that your baseline assumption needs to be that sometime the next three-to-five years, most of your airline partners are going to require require your travelers to book directly with them on their website or app in order to get their frequent flier benefits, period. So you've got kind of a half-step here from American, but this doesn't feel like the end game to me. Not just for American but for other airlines as well. 

And so if you are in a spot where you're thinking about the long term for your program, you need to think with a three-to-five year timeframe and you need to think through the lens of what happens if airlines do this. And that drives a wedge between me, the travel manager, and my travelers interests when it comes to their quality of life and their travel. Because at the end of the day, if you're a road warrior and you're not earning your miles and your frequent flier status, and my employer has a coach-only policy, am I really going to be sitting in the middle seat in the back for the rest of my life for the next 10 years? Or am I gonna get to go work for PwC? So it becomes a retention issue at some point where the companies that have thought ahead and have constructed their travel programs to be more flexible and include the corporate direct will be the ones that have the happier road warriors, and those that have – that their head explodes when they think of anything beyond the TMC or the OBT – that's the risk. The risk is employee revolt.

Elliott McNamee
Jeff you know, Cory just dropped another scary opinion. And Denny asks, “are TMCs and online booking tools even still relevant in a world with corporate direct?” And from your perspective, is corporate direct, is it anathema? Is this evil? What's going on here?

Jeff Klee
It's certainly not evil. And look, I would like nothing more than – I believe in the concept of an-all-in-one platform, and if we can have every single piece of content and functionality that travelers needed, and we could build a booking tool that every single person would love and want to use and say “without a doubt, this is the best, easiest, most awesome place to book” – that's my dream. 

But we're not living in fantasy land. We're living in the real world. And I think we have to deal with the world the way it is, not the way we want it to be. So even though, yes, it's best for TMCs if we can preserve the old commercial models and the old workflows and have everything be in-channel, the fact is, there's a lot of content out there that is fragmented, and there are a lot of cases where, whether it's because of the need for content or just choice, like a Delta Medallion member or United 1k people, sometimes the supplier direct experience is better than the corporate booking tool experience. And we could fight that or we could try to embrace it, and I think the best option for us as the TMC is to figure out a way to still accomplish what is ultimately our main objective, which is to deliver to the company the savings that they need, the visibility, the control, all the things that are important to them at the company level. But to do it in a way that makes their travelers happy, because most customers, most of our customers also want their travelers to be happy with the booking process to support that they have, so we're trying to figure out how we create the best-of-all-worlds. But then I'd be lying if I said we had all the answers and all the solutions – it's very much a work in progress. 

We urge airlines and other suppliers to try to make bookings as interoperable as possible. Kim was talking about this earlier, where we think it's best for our mutual customers, if something happens on the direct side, for us to have visibility into it, if it's one of our managed clients, and vice versa. So it doesn't matter if a client books in our tool then changes on the airline app and comes back and changes again in our tool. It should all – the travelers don’t care, they want to do what's easiest at the moment, and we should support that. So I think NDC is helping that and I think we as an industry are way better off now than we were a year ago or two years ago. But I do think we're still kind of in the infancy of figuring out how best to put the pieces together, to decide if we stick with if we're trying to provide travel management services. Sometimes you immediately go from there to “Okay, the only way to do that is that I need a green screen to have agents working in a GDS and after building this, this and this, otherwise, we can't help a company manage their travel” – and that's that's completely not true. There's lots of ways, if TMCs were to disappear, GDSs were to disappear, then companies would still travel for business and they would figure it out, and there will be solutions to deal with it. So let's figure out what is the best solution for 2024, not 1994.

Elliott McNamee
Okay. It’s 1:56 PM here on the east coast here, it's a nice sunny day here in Boston, Massachusetts. We do not have time to get to TMC consolidation. So, I have a few questions that I will get answers to those questions from our esteemed panel. That will be on the AmTrav blog along with this recording and transcript once we transcribe it later. 

So, with that, I would like to say a big thank you to our panel. We are going to wrap up here like to preview some upcoming webinars, although I don't think that we have quite the same mix of scary opinions. 

Up next. I'm looking forward to meeting with someone else in the Garner network. Stephen Fitzgerald. We've been talking about hotel payment and distribution, Stephen is going to join us to give us a really good understanding of how hotels work, how hotel payment and distribution and technology work. There's so much talk about NDC – we're going into hotels too, because, it's been said and it's accurate: airlines don't need fixing as badly as hotel distribution needs fixing. So we'll talk to Stephen about what's going on there. The “what,” the “why,” what's the potential. 

If you're an AmTrav customer we have more Tips and Tricks webinars coming up, and then either later in May or in June, we will do another live demo of AmTrav in Action.

If you'd like to contact AmTrav, my colleague, Susan Altman would love to hear from you. SusanA@amtrav.com. She would love to hear from you again. Thank you. Thank you to our panel. And we will look forward to seeing you again soon. Have a great day.

Consolidation in managed travel:

Coming soon.