Amadeus Pushes Forward on Tech Initiative Despite American Airlines Setback

Skift Take

Amadeus isn’t relying on the business from its next-generation distribution tech for now. It’s up to airlines to choose how they want to use it.

Justin Dawes

Since American Airlines abandoned its adoption of a next-generation distribution strategy this year, that left some wondering if other airlines may follow suit. 

Decius Valmorbida, president of travel for Amadeus — one of the companies providing the tech to help American and other airlines adopt these new strategies — is not worried about the repercussions of the American Airlines retreat.

“I find that it’s going to be a very small impact within the quarter because the overall trend is of adoption,” Valmorbida said Wednesday during an earnings call. “And we’re going to see that continue in the quarters to come independent of American Airlines.”

Slow Burn for NDC

American Airlines had been transitioning to a strategy focused on direct bookings along with what the industry calls the new distribution capability (NDC), new tech that improves connectivity to travel sellers and better enables personalized offers.

The traditional method for connecting to travel sellers is through the decades-old global distribution systems, which is the primary business for Amadeus and its competitors. 

The airline industry has a long-term plan to adopt NDC, but American Airlines was among the first to make such a strong commitment, until it backtracked for what the CEO said was poor execution. 

But, Amadeus has now signed 60 airlines — mostly recently Tunisair, Eva Air, and Vueling — to its NDC business. And bookings through that tech are increasing, Valmorbida said, though they still account for a very small portion of overall bookings. 

“This is very much neutral for us in terms of business model. It is a question of adoption. The adoption of NDC goes depending on the commercial strategy of the airline,” Valmorbida said. “Those things change over time. We have just seen American Airlines that was putting a lot of emphasis on NDC adoption and now they are taking a little bit of that emphasis out.”

The plan had been that the airline would provide exclusive benefits, like ability to earn loyalty points, to agencies that purchased flights through one of its preferred channels. Now, American is working to repair relationships with travel agencies and correct what could be a $1.5 billion mistake. 

Willie Walsh, head of IATA, the organization behind the industry’s planned transition to NDC, told Skift that the principles behind the change remain valid. “I don’t think there will be many [airlines] looking at what American did. I think there will be lots of airlines looking at those that have made it successful.”

Record Revenue

There were a few issues that negatively impacted bookings for Amadeus, including the bankruptcy of European tour operator FTI Group and increased direct connections in North America between an online travel agency and some airlines.

Still, Amadeus had a slight increase in bookings compared to the first half of last year. The Asia Pacific region had the biggest growth by far, a 25.1% increase. 

Despite the issues, Amadeus generated a record amount of revenue for the first half of 2024 and exceeded pre-pandemic levels for the first time. 

The company said Wednesday that it generated $3.4 billion (€3.1 billion) in revenue during the first six months of the year.

Amadeus had been steadily growing revenue since before it went public in 2010, until it hit a sharp decline in 2020 because of pandemic-related issues. Revenue for the first half of 2019 was $3 billion (€2.8 billion).

While revenue from air bookings was still slightly below what it was in 2019, Amadeus has made up the difference in other areas, particularly its growing hospitality tech business.