American Airlines has been contacting travel agencies this week, in at least some cases to end corporate incentive contracts or to significantly reconfigure them.
The move is part of the airline's broader shift in its sales strategy that is geared toward achieving a higher percentage of direct and NDC-supported sales while reducing intermediation costs and the share of its sales that are completed via legacy GDS channels.
In a letter dated May 15 to Fort Collins, Colo.-based Exito Travel, American vice president of global sales Thomas Rajan informed the agency that its incentive agreement won't be renewed upon expiration on June 30.
The communication appeared to be a form letter, making no specific reference to Exito, including in the opening salutation. It said that American has carefully reviewed each incentive agreement across its portfolio of travel partners as part of its sales evolution over the past many months.
"I recognize this is a difficult decision, but please know it was one that was taken very seriously and that put the service of our mutual customers at the forefront," Rajan wrote.
He told Exito that while it will no longer have a dedicated account manager, the agency can continue to use American's SalesLink agent portal, or it can call American's retailer support number.
Emma Sutton, Exito's chief human resources officer, said she believed Exito was far from alone.
"We can assume that many agencies were cut," she said.
ASTA's corporate office has also been able to view an email American sent cutting an agency from its incentive program.
"The letter speaks for itself," CEO Zane Kerby said. "American Airlines is removing incentives for corporate agencies to sell American Airlines. Consequently, corporate agencies will review their business relationship with American Airlines."
In a statement, American said it had begun issuing communications to accounts this week about renewals but it won't be providing specifics on contracts.
"American Airlines is reimagining its retailer programs to create more value for our travelers," the statement read.
"At the heart of the new program is modern retailing, which will now include incentives on [NDC] channel adoption, upselling and ancillaries. American is excited about the future of modern retailing and the seamless experiences it creates for customers we serve."
The statement suggests that American is reconfiguring some corporate contracts, as opposed to canceling them.
Dave Hershberger, president of Cincinnati-based Prestige Travel, which is part of the Travel Leaders Network, said that he knows of agencies that will have their incentives reduced but not eliminated. Others have been contacted by American and told their contracts will undergo little or no change, he said.