The CEO of American Airlines has confirmed that the airline will no longer implement a policy restricting the earning of airline miles on flights booked indirectly. The changes were to come into effect later this summer but have since been deemed counterproductive to building customer loyalty, as the updates caused confusion as to which flights earned the full number of miles.

What did he say?

Speaking at the Bernstein Strategic Decisions Conference, American Airlines' Chief Executive Officer Robert Isom confirmed the airline was experiencing a "softness in close bookings" relative to its expectations. Executives believe this is partly due to changes in its sales and distribution strategy. For the everyday flyer, this most notably involved the airline announcing it would restrict how many AAdvantage miles and loyalty points people earned based on where they booked.

The change would presumably encourage more passengers to book directly with the airline or "preferred travel partners" at the expense of third-party providers like Expedia and Priceline. Implementing the new rules was delayed until July and appears to have been significantly rethought. Isom confirmed this was due to spending "a lot of time" evaluating the company's strategy holistically and piece by piece and listening to travel agencies and corporate customers, concluding:

"You’ll see us make changes. For example, next month, we were going to differentiate who earns AAdvantage miles and who didn't, based on where they booked. That's off.

"We're not doing that because it would create confusion and disruption for our end customer, and we're going to make sure that we take care of it. We're listening to feedback. We're learning and adapting.

Instead, the airline is reevaluating its relationship with travel agencies and corporate markets.

More carrot, less stick

The oneworld alliance carrier concluded the best path forward is to continue ensuring its seats are available to the most customers. It would appear that these customers prefer their flights to be distributed through a large variety of means. Isom confirmed the airline is working more closely with agencies and partners to ensure that the transition is not disruptive to end customers:

“We want to make sure that no customer that's out there traveling is made worse off from the changes that that we make.”

Part of this includes the airline's shifted strategies from using "a lot of sticks" to putting more carrots in place to ensure that seats are available wherever customers want to buy them. For instance, instead of removing content from agencies relying on legacy technologies, American is now encouraging them to incentivize, enhance, and promote the use of New Distribution Capability (NDC) technology.

The news came shortly after the announcement that the airline's Chief Commercial Officer, Vasu Raja, would exit the company next month. In his remarks, Isom noted his admiration for Raja's creative thinking and passion, calling him an innovator, disruptor, and “good friend.”