American to Remove Cheapest Fares From GDS

[serfty]

I wonder how this will affect tools such as ITA Matrix?

American Blows Up Its Sales Team, Launches a Risky War Against Corporate Accounts and Travel Sellers – Cranky Flier

Starting in April, American will remove its lowest fares — about 40 percent — from the GDS using the old way of selling. Agencies who don’t adapt will now find themselves only with high fares in the market. This will create all sorts of problems until the systems are truly functional and ready.

... So what if agencies aren’t able to see 40 percent of American’s fares? Because of American’s huge network advantage in the cities it cares about, it will find a way to backfill that traffic that disappears from the agency side. That’s all American wants anyway; to have the customer working directly the way it wants to work.

There are so many potential problems with this move that it’s hard to state them all. Travel agents are exactly that… agents for the airline. They are there to service bookings, help with changes, resolve problems, and do that without burdening the airline’s internal systems. A big shift toward direct traffic too quickly could result in disaster for American’s internal servicing efforts since it’s unclear how much servicing can be done on NDC bookings.

 

[Bundy Bear]

40% sounds a bit high.

I can see merit in the idea but effectively removing almost half the seats from the GDS will make your airline expensive against the competition.

I could understand if it was your lowest class was being removed, no seat selection, no bag check in, but 40% wow not well thought out at all.

 

[Lynda2475]

I would always expect the best price to be booking directly with the airline (plus easier to manage). Surely will drive customers to book direct and eliminate need to pay comissions.

QF now give benefits like free seat select irrespective of status for direct bookings.

I think we will see more airlines encouraging direct bookings.

 

[MELso]

There's a good Youtube video on the failings of the GDS here.

It's going to be interesting watching this. By removing the cheap fares, these are presumably not going to show up on sites like Google Flights which rely on GDS queries (not sure whether it's implemented NDC), so that even if the routings show up, American will be perceived as being pricey when compared to the competition. It'll appeal only to people who would've booked with American anyway (and are therefore less likely to be price sensitive and thus more profitable). Will it work? Don't know, but what it will do is continue the trend of making it hard for consumers to find routings that work for them and compare prices...

I am flying AA on a couple of domestic legs in December and January. While I did book directly with the airline, I only ended up booking AA because 1. I wanted to meet my friend who was flying into DFW before we journeyed on together and 2. they operate a 787 on the MIA-LAX route making it cheap to fly in Premium Economy seats transcon.

 

[madrooster]

I am flying AA on a couple of domestic legs in December and January. While I did book directly with the airline

You also miss out on the approx 8% discount for being a foreigner (ie. tax exemption on domestic fares) for booking direct.

 

[justinbrett]

You also miss out on the approx 8% discount for being a foreigner (ie. tax exemption on domestic fares) for booking direct.

Then why is it that AA AU website charges more than AA US for US domestic flights? (Particularly domestic F)

 

[MELso]

You also miss out on the approx 8% discount for being a foreigner (ie. tax exemption on domestic fares) for booking direct.

Unfortunately, you still get slugged the 7.5% tax if you're based overseas. To avoid it, you need an international leg (which then sees other taxes imposed ).

 

[RooFlyer]

From the linked article. Who else does this remind you of?

When people talk about the product, they think about the food, the entertainment, the amenities, etc. That is not what American thinks of as being the product. As Thomas told me, “our product is not so much just the hard product but it is the network that we are a part of, the ability to operate that product reliably, create an ecosystem with our loyalty program, that if those customers enjoy and appreciate the quality and reliability, they want to engage with the ecosystem.” American thinks quite highly of its “product” these days. Really, it’s the network that is probably making them feel so bold.

And this:

This, however, is a mere minor issue compared to the bigger change, one that has been brewing for some time and is probably worth another 10 posts of its own. The industry has been warming toward selling tickets using New Distribution Capability (NDC) for years. This allows airlines to control more of what is offered to the customer in the sales process. It’s the key to merchandising, you know… the thing that airlines have promised and failed to turn into reality. It also makes it harder for agencies to service their customer bookings.

My TA is already doing bookings via the NDC - I mentioned it in this thread where the TA said that "availability has been blocked in the GDS" by BA.

GDS Vs NDC

Has anyone knowledge or experience of the "NDC" airline (+?) booking system? My Travel Agent just booked me a BA flight in Europe - GDS fare abt $890, NDC fare $405! Some info here: A travel manager’s guide to NDC Look like Qantas is on board with it as well.

www.australianfrequentflyer.com.au

 

[madrooster]

Unfortunately, you still get slugged the 7.5% tax if you're based overseas. To avoid it, you need an international leg (which then sees other taxes imposed ).

If you're based overseas... you should basically never pay the 7.5%. I haven't paid the 7.5% at all for a very very long time.

 

[madrooster]

Then why is it that AA AU website charges more than AA US for US domestic flights? (Particularly domestic F)

Different issue - AA has higher fares filed on the AA AU website.

 

[MELso]

If you're based overseas... you should basically never pay the 7.5%. I haven't paid the 7.5% at all for a very very long time.

On wholly domestic routings within the US on public flights? Sorry to be the bearer of bad news but you will (or at least should) be paying it, but it's built into the price (along with a tax of $US4.80 per segment unless flying into or out of rural airports).

 

[madrooster]

On wholly domestic routings within the US on public flights? Sorry to be the bearer of bad news but you will (or at least should) be paying it, but it's built into the price (along with a tax of $US4.80 per segment unless flying into or out of rural airports).

Absolutely. I haven't paid those taxes in probably 10+ years. Hell even those I know who are based in the US don't pay it... it pays to be smart about how you structure your travel and ticketing.

 

[MELso]

Absolutely. I haven't paid those taxes in probably 10+ years. Hell even those I know who are based in the US don't pay it... it pays to be smart about how you structure your travel and ticketing.

You can believe what you want, but any flights that start and finish in the US are considered taxable transportation, 'any person' must pay tax unless exempt and no exemption applies for foreigners (although as subsection (2) states, the tax does not apply if any part of the transport is outside the US as I stated).

 

[madrooster]

although as subsection (2) states, the tax does not apply if any part of the transport is outside the US as I stated).

Then you work with the exemptions / satisfy the exemption.

Foreigners (largely) satisfy the exemption due to the fact they'd most likely be flying into the US on international transportation, and thus in most cases they would be eligible. A smart US resident could also do the same, and certainly a few US residents on this forum do.

In reverse, AU residents who are smart about their ticketing can avoid paying GST on AU domestics. It's harder to do, but very doable if you structure well. If it's business travel and thus you can get input credits, then there's not much point doing it as it's money in money out. If you're doing leisure travel, it's worthwhile picking up a ~10% saving on AU domestics.

Similar exemptions exist in Canada and other places.

Here is an example off the AA US website (in USD):



The same flights with the ~8% saving:

 

[MELso]

Foreigners (largely) satisfy the exemption due to the fact they'd most likely be flying into the US on international transportation, and thus in most cases they would be eligible.

So in other words, there's no blanket exemption for foreigners (as you originally stated), but if you include domestic legs as part of an international itinerary, you don't pay tax.

Which was what I was saying!

 

[madrooster]

So in other words, there's no blanket exemption for foreigners (as you originally stated), but if you include domestic legs as part of an international itinerary, you don't pay tax.

Which was what I was saying!

It effectively is despite the law not explicitly wording it that way. How is a foreigner meant to travel to the US otherwise? Cruise/land transportation is also eligible. The international transportation does not need to be air.

 

[MELso]

It effectively is despite the law not explicitly wording it that way. How is a foreigner meant to travel to the US otherwise? Cruise/land transportation is also eligible. The international transportation does not need to be air.

It's not a question of 'booking direct' (vs through a travel agent) or being a 'foreigner' (vs being a US citizen) though (which is what this thread was about). It's a question of being linked to an international itinerary.

In my case, the domestic US flights are on a separate itinerary to my flights into and out of the US. While there is less than 12 hours between my SYD-SFO award flight on UA and SFO-DFW-FLL paid flight on AA (meaning it's technically not liable to the excise), I'm not going to bother chasing up $US60 in tax with the IRS.

 

[madrooster]

I'm not going to bother chasing up $US60 in tax with the IRS.

No one is realistically bothered to go and harass the IRS to get their 7.5% back. You don't pay it in the first place - plenty of members here don't pay it in the first place.

 

[justinbrett]

So how does a mere mortal make a tax free booking on AA domestic that doesn't contain an international flight?

Any AU TA?

 

[MELso]

No one is realistically bothered to go and harass the IRS to get their 7.5% back. You don't pay it in the first place - plenty of members here don't pay it in the first place.

I'd love to know how to avoid paying it when I can only get an award ticket as far as SFO at a peak travel time from a partner airline of the operating carrier, but need to get to FLL using a different airline to make a particular connection, and don't want to pay a travel agent at least as much as the tax to book the ticket, all the while risking the award availability disappearing...