Dive Brief:
- American Airlines is confident in its plan to win back business customers through new contracts with travel management companies, premium experiences and loyalty offerings, executives said on a Q3 2024 earnings call Thursday.
- Loyalty revenue was up about 5% year over year in the third quarter, CEO Robert Isom said. AAdvantage members accounted for nearly three-quarters of premium cabin revenue.
- “With the changes we're making in our commercial organization, we're setting the foundation for success as we regain our share of corporate and agency revenue,” Isom said. “We will continue to make progress on those efforts, listening to customer feedback and tracking our performance to ensure the changes we're making are producing the expected returns.”
Dive Insight:
It isn’t all good news for customer experience at American.
On Wednesday, the Department of Transportation levied a $50 million fine against the airline after a DOT investigation found the airline violated laws protecting passengers with disabilities and damaged wheelchairs from 2019 to 2023. American did not mention the fine on the call.
American has been working to win back business customers after a plan to route business revenue directly through the airline rather than corporate travel agencies negatively impacted the company’s bottom line. Business and premium flyers only make up a fraction of flyers, but generate the most revenue.
In Q2, American's corporate and agency flown revenue share “bottomed at 11% below our historical share,” Isom said. “Since then, our share of indirect bookings has started to recover, and we estimate we are currently at 7% below historical levels, and we expect to see continued improvement in the months ahead.”
Delta Air Lines and JetBlue are both courting premium flyers as consumers demand more high-end experiences, making winning back such flyers all the more important — a fact Isom acknowledged.
“We're going to accommodate that,” Isom said. “They want more control. We're going to make sure that we'll engage them on that front. And overall, I think that the game plan for American is going to be very beneficial in unlocking a lot of value from a revenue perspective.”
To regain such customers, American has been negotiating incentive-based agreements with corporate travel agencies and travel management companies. In the third quarter, it secured “competitive agreements” with more than half of travel management companies and improved support to travel agencies, Isom said.
“We rebuilt our agency support capability, and based on the team's NPS scores, they're providing world class service,” Isom said. “These agreements combined with the support enhancements are major steps towards restoring our share in these important distribution channels.”
Last month, American relaunched its corporate experience program to provide corporate customers with premium experiences and benefits, including priority boarding, preferred seats and priority reaccommodations after disruptions.
AAdvantage Business, American’s loyalty program for small- and medium-sized businesses, saw growth in Q3 as well.
“Our actions to expand the benefits, which include bookings through agencies, enhanced program support and a more simplified enrollment process, are clearly working,” Isom said. “We expect to accelerate the growth of the program going forward.”
Isom touted the airline’s loyalty program and the value it offers.
“From a loyalty perspective, we’re really proud of the AAdvantage program overall. We’re constantly looking at ways to better engage our customers, not only from a loyalty perspective, but just also from a value perspective,” he said.
