January 29, 2010

Mr. Gerard J. Arpey
Chief Executive Officer
American Airlines
P.O. Box 619616 – MD 5675
Dallas/Fort Worth Airport, Texas 75261

Via Facsimile and Electronic Mail

Dear Mr. Arpey,

We have recently received a significant number of questions from corporate travel managers, travel management company (TMC) executives and other participants involved with the travel procurement process regarding what American Airlines has called its “Direct Connect” merchandising strategy. Unfortunately, this proposed program is not well understood in the marketplace and is causing your best customers and business partners some confusion and concern. We are writing to ask you to provide answers to the questions which we hope will clarify your intentions. 

Specifically:

1) How will the Direct Connect program change the products that American offers its customers and the pricing of those products?  

2) How will these changes impact existing negotiated agreements between American and its customers?

3) Will American withdraw or withhold content from the GDSs as a result of the Direct Connect program?  

4) Does American intend to require or look to its customers to pay for American’s current baseline distribution costs as well as the additive costs associated with merchandising its product offerings?

5) Will American penalize TMCs, travel agencies or corporations in terms of discounts, commissions or other negotiated benefits (including access to content) based on their choice of preferred distribution channel?

We understand that airline product unbundling, repackaging and merchandising for the purpose of driving the growth of ancillary airline revenues appear to be here to stay. It holds some promise for sustainable and profitable revenue streams for airlines. However, it also carries significant risk for buyers and travel agencies in the managed corporate and leisure travel segments. This is especially true if the new Direct Connect program is used to maneuver the end customer into paying the costs of merchandising and distribution, in addition to the price of the products and services themselves. The risk is further magnified if the Direct Connect program is rolled out in a manner that creates inefficiencies that drive additional costs into the travel buying process.

The travel distribution and business travel sectors of the industry are ready to work with American Airlines should it commit to work cooperatively, diligently and in good faith with us to develop solutions to the problems caused by unbundling. This can be easily done by cooperating with the industry on approaches that can be widely and efficiently adopted by airlines and travel agencies, TMCs and corporations who facilitate and / or purchase airlines’ products.

We would appreciate a response to the questions and issues we have outlined here by February 9, 2010.

Sincerely,

Kevin Mitchell, Chairman, Business Travel Coalition
Paul M. Ruden, Senior Vice President, American Society of Travel Agents
Art Sackler, Executive Director, Interactive Travel Services Association

Copy: Dan Garton
           Kurt Stache
           Cory Garner