Source Premium Policy

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I.      OVERVIEW

American Airlines wishes to provide all agencies access to full schedule, fare and inventory content through the distribution source of their choice, on terms that allow American to compete with its low cost rivals.

To achieve this end, American has negotiated full content access deals with many distribution providers that offer new, cost-effective products.  These products are referred to as "Competitive Booking Sources".   Travel agencies that use Competitive Booking Sources to create bookings will have access to full American content.

American recognizes that some travel agencies or corporate travel departments may value the use of certain GDS providers that do not qualify as Competitive Booking Sources.  Accordingly, American currently intends to preserve flexibility for these agencies and corporations by providing full content access through other presently available providers, referred to as "Other Booking Sources", although these sources are more expensive to American.  In exchange for the flexibility to choose Other Booking Sources, agencies that use these sources will be required to bear a portion of the cost of content distribution via these sources.  Also, American, consistent with any applicable contractual obligations, may eventually withhold content from Other Booking Sources, particularly if an Other Booking Source fails to display American content on neutral terms as compared with other airlines.

This document outlines the policies and procedures of this initiative.  Effective September 1, 2006, your agency's continued sale of air transportation on American will evidence our mutual agreement that this initiative constitutes a clarification of your responsibilities and duties under the ARC Agent Reporting Agreement or additional terms and conditions, and will become contractually binding starting September 1.  These policies and procedures are subject to change upon notice from American.

II.      ELIGIBLE AGENCIES

The policies and procedures outlined in this document apply to bookings originated by ARC-accredited agencies and outlets, including corporations with a "CTD" designation, located within the 50 United States, with respect to bookings originated in or via the United States.

III.      FEE STRUCTURE

a.      Competitive Booking Sources. American has negotiated with various travel distribution systems to provide Competitive Booking Sources for American, its travel agencies, and corporate accounts.  These companies provide cost-effective booking sources for American and, as a result, agencies and corporations will not be assessed any new fees for segments booked using a Competitive Booking Source.

b.      Other Booking Sources. Other Booking Sources charge American more to distribute content, making them less efficient distributors for American and hurting American's ability to compete.   Therefore, agencies that choose to source content via these sources will be required to pay a premium ("Source Premium") to compensate American for costs charged by Other Booking Sources.  The table below lists Competitive and Other Booking Sources and their associated Source Premiums.

SEPTEMBER 2006 - April 30, 2008 BILLING PERIODS

      * Please contact the GDS provider for more information about these products.

c.      Updates. This table will be updated periodically as sources and rates change.  Agencies should monitor this web site (www.aa.com/agency) to remain up to date.

d.      Effective Date. The Source Premium will be applied to all Other Booking Source net bookings originated or changed on or after September 1, 2006.

IV.      INVOICING AND SETTLEMENT

a.      Invoicing.

                                 i.            Eligible Bookings. For each Other Booking Source, agencies will be invoiced based upon net booked segments created, including passive segments, using the billing data provided to American by the GDS.  For example, if an agency uses an Other Booking Source to create a PNR for a single passenger to travel from DFW-LAX-DFW, this booking counts as two gross flight segments.  Then, if the agency cancels the final flight segment (LAX-DFW), the agency would be charged only for creating one net booked segment.

                                ii.            Billing Period. Billing periods will begin on the first calendar day of the month and end on the last calendar day of the month.

                             iii.            Process. Source Premium Invoices will be sent to the agency's home office address within 30 days after the conclusion of the billing period.  For example, the invoice for September activity will be sent by the end of October.

b.      Settlement.

                                   i.            Payment Terms. Agencies will have 30 days from the date of invoice to pay their invoice.

                                 ii.            Enforcement. If payment is not received within 30 days from the date of invoice, American will deduct the outstanding balance amount from any payments due from American to the agency.  American may also pursue other remedies.  American reserves the right to assess interest on past due amounts at a rate not to exceed one and one-half percent (1.5%) per month, compounded monthly, or the maximum rate permitted by law, whichever is less, from the date due to the date of the payment.  If Other Booking Source charges remain unresolved, American may (pursuant to the ARC Agent Reporting Agreement and the American Airlines, Inc. Addendum to the ARC Agent Reporting Agreement), upon written notice to agency, immediately terminate its appointment of any agency or agency location.

c.      Credits. In accordance with Sections V and VI, credits may be issued only when it has been determined that a billing error has occurred.  Credit memos will be issued to agencies that may be remitted to pay all or a portion of their next invoice.

V.      EXCEPTIONS

a.      Billing Errors. Agencies that are billed for ineligible bookings will be entitled to a credit for the Source Premium charges applied to those bookings.

b.      No other exceptions. American will not offer any other exceptions.

VI.      AGENCY SUPPORT

a.      Source Premium Information Desk. Invoices will include contact information for assistance with agency questions about Source Premium policies, billing details, and potential billing errors.  The Information Desk will not be authorized to issue credits for any reason other than billing errors.

b.      Sales Representatives.  Agencies are encouraged to contact their American Sales Representative for all other questions or concerns.