In a strategic move highlighted during Thursday's Q4 earnings call, American Airlines executives announced their eventual transition to 100% internet bookings, emphasizing the direct and travel agency channels. This shift includes the utilization of the New Distribution Capability (NDC) technology standard for agency internet bookings. American's chief commercial officer, Vasu Raja, emphasized the importance of meeting customer demands for online transactions, stating that it allows them to offer the best content at optimal costs and service levels. While the timeline for this transition remains uncertain, recent data revealed that 80% of American's bookings in Q4 came through its website, app, or NDC, marking a significant increase from the previous quarter.
American CEO Robert Isom acknowledged the rapid pace of this transition, emphasizing that the company intends to distribute through the internet strategically. Although there are currently no plans to discontinue support for the legacy Edifact channel, used for GDS bookings, the company aims to gradually transition retailing partners to internet-based channels. The decision to withdraw content from the Edifact channel in April 2023 has contributed to a 15% increase in revenue compared to 2019, with selling expenses decreasing by 8-9%.
Looking ahead, American plans to incentivize internet bookings by offering additional loyalty-program mileage and enhancing servicing capabilities for online distribution. There are also considerations to limit selling and servicing through non-internet-based channels. In terms of business travel, fourth-quarter domestic revenue reached 90% of 2019 levels, with unmanaged business surpassing pre-pandemic figures and managed business showing resilience with flat traffic on higher yields.
The airline is enthusiastic about the ongoing rollout of the AAdvantage Business program, introduced in October, which excludes rewards for travel agency bookings. AAdvantage members represented two-thirds of American's revenue in 2023, showcasing their significance in driving revenue growth. The company reported a 51% increase in new AAdvantage enrollments in 2023 compared to 2019 figures, underscoring the program's sustained appeal and growth potential.
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