American Airlines chief commercial officer Vasu Raja will depart the airline in June, the carrier announced Tuesday.
In addition to his current responsibilities and effective immediately, Stephen Johnson, vice chair and chief strategy officer, will assume leadership of the commercial organization and help to lead the search for a new chief commercial officer, according to American.
Raja joined American in 2004 and had been in his most recent role since April 2022. Rumors of his departure had swirled in the industry for two weeks. When asked by BTN for comment, American on May 17 would confirm only that Raja was working remotely “for a few weeks” while taking care of a family matter.
Raja has been among the chief architects of American’s airline distribution and corporate strategy changes, which include a shift away from the corporate indirect booking model via agencies to a direct-booking strategy.
The carrier announced in December 2022 it would in April 2023 begin to pull up to 40 percent of content from EDIFACT, the main channel for corporate travel bookings, and make those fares available only through direct or New Distribution Capability-enabled channels. It carried through on that plan.
The move caused an uproar in the industry for those without a direct or NDC connection with American. Many buyers and suppliers ever since have scrambled to add direct or NDC capabilities so travelers have access to full content—or they have shifted business away from the carrier.
Further, American is changing how travelers can earn AAdvantage loyalty program miles and points based on how they book. To earn, travelers must book direct or through an NDC-enabled channel, belong to a company with a corporate account or that is part of its small and midsize business AAdvantage Business program, or book through what the carrier considers a “preferred travel agency.”
Raja defended the moves, and in American’s latest earnings call in April, he said that “60 percent of our customers are our AAdvantage customers, and they produce two-thirds of our revenue” and “a lot of these customers are actually leaving the agency and coming to us directly on their own.”
Still, Delta Air Lines and United Airlines each reported first-quarter corporate growth rates of 14 percent year over year, while Southwest Airlines claimed that it continued to gain corporate market share.
Some corporate buyers have noted they were keen to shift share away from American. Without naming the airline, Takeda global meetings and travel center of excellence head Michelle De Costa told BTN last month, “We made some relatively extreme supplier shifts starting April 1 last year … a very extreme airline shift. We went from 40 percent [share] to 7 percent in three weeks through very aggressive efforts.”
As some corporate buyers resisted AA’s aggressive NDC tactics or delayed turning on NDC without the promise of robust servicing through their agencies, TMCs could only get caught in the crossfire. American’s planned “preferred agency” gambit, which would have required agencies to be booking 30 percent of American volume through NDC channels, was scheduled to take effect May 1—albeit, with little communication about how that 30 percent metric would be formulated. (Was it on the day, during that current week, the month, the quarter? No one seemed to know.) At the eleventh hour, American pushed the schedule to July, perhaps the first sign of hedging from the carrier since it announced its all-in NDC strategy in December 2022.
Additionally, the carrier to a large degree dismantled its veteran sales team in 2023, reorganizing much of the structure with changes in February and September. The carrier earlier this month restructured part of the commercial team, with a memo from Raja noting that the “redesigned revenue and AAdvantage team” will place all areas of revenue management, including insights, engineering, planning and coordination under the leadership of SVP of revenue management and loyalty Scott Chandler.
It remains to be seen if Raja’s departure heralds another shift in the carrier’s corporate strategy, but at least one industry expert doesn’t think it will.
“[American] has a really well-formed strategy and they’re executing a well-formed strategy, and I don’t think they have the ability to divert from it,” former American executive and founder of Garner Advisory Cory Garner told BTN. “We can’t go back to the old way of doing business. I’m not sure [Raja’s leaving] results in a tremendous amount of difference, maybe some tweaks here and there. But I don’t see a complete reversal. There are a lot of moving parts at the airline and with strategy. I’m not sure it results in a material shift on the corporate travel side.”