Code sharing by airlines

Date added: 17 March, 2007

A codeshare agreement, sometimes simply codeshare, is an aviation business arrangement where two or more airlines share the same flight. A seat can be purchased on one airline but is actually operated by a cooperating airline under a different flight number or code. The term “code” refers to the identifier used in flight schedule, generally the two-characterIATA airline designator code and flight number. Thus, XX123, flight 123 operated by the airline XX, might also be sold by airline YY as YY456 and by ZZ as ZZ9876. It allows greater access to cities through a given airline’s network without having to offer extra flights, and makes connections simpler by allowing single bookings across multiple planes. Most major airlines today have code sharing partnerships with other airlines and code sharing is a key feature of the major airline alliances.

Under a code sharing agreement, the airline that actually operates the flight (the one providing the plane, the crew and theground handling services) is called the operating carrier. The company or companies that sell tickets for that flight but do not actually operate it are called marketing carriers.

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[edit]History

In 1967, Richard A. Henson joined with US Airways predecessor, Allegheny Airlines, in the nation’s first codeshare relationship.^[1] The term “code sharing” or “codeshare” was coined in 1989 by Qantas and American Airlines,^[2] and in 1990 the two firms provided their first codeshare flights between an array of Australian cities and U.S. domestic cities. Code sharing has become widespread in the airline industry since that time, particularly in the wake of the formation of large airline “alliances”. These alliances have extensive codesharing and networked frequent flyer programs.

[edit]Reasons and advantages

Under a code sharing agreement, participating airlines can present a common flight number for several reasons, including:

[edit]For passengers

Connecting flights: This provides clearer routing for the customer, allowing a customer to book travel from point A to C through point B under one carrier’s code, instead of a customer booking from point A to B under one code, and from point B to C under another code. This is not only a superficial addition as cooperating airlines also strive to synchronize their schedules and coordinate luggage handling, which makes transfers between connecting flights less time-consuming.
Shared responsibility between the carriers: When flying between two cities without a single-airline connection, the passenger can pick a codeshared flight over two airlines or two flights booked separately. If the flights are not codeshared, then the second airline has no responsibility if the passenger or luggage misses the second flight due to a delay with the first. Under a codeshared flight, the second airline is unlikely to charge extra fees or deny boarding should the first, cooperating airline cause a delay.

[edit]For airlines

Flights from both airlines that fly the same route: this provides an apparent increase in the frequency of service on the route by one airline
Perceived service to unserved markets: this provides a method for carriers who do not operate their own aircraft on a given route to gain exposure in the market through display of their flight numbers.
When an airline sacrifices its capacity to other airlines as a code share partner, its operational cost will generally be reduced to nil. ^[3]

[edit]Competitive concerns

Much competition in the airline industry revolves around ticket sales (also known as “seat booking”) strategies (revenue management, variable pricing, and geo-marketing). Mostpassengers have a preference for flights that provide a direct connection. Code sharing achieves this. Criticism has been leveled against code sharing by consumer organizationsand national departments of trade since it is claimed it is confusing and not transparent to passengers.^[4]

http://en.wikipedia.org/wiki/Codeshare_agreement

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h, for the days when the name on the side of the plane had something to do with the airline you thought you were flying.

You were pretty sure you bought a ticket on one airline, but when you showed up at the airport, they sent you to another airline in another part of the airport because that other airline is “operating this flight.” Worse, they were in another terminal about halfway across the continent. Whoa.

If I buy a ticket on Hotwings Airlines, shouldn’t I expect Hotwings to fly the darned airplane? Welcome to the sometimes confusing world of codeshare agreements.

On its Web site, American Airlines defines the term “codeshare” like this:

Definition — What is codeshare?
An interline partnership where one carrier markets service and places its code on another carrier’s flights. This offers carriers an opportunity to provide service to destinations not in their route structure. These schedules are considered online bookings for most situations. An exception could be the minimum connecting time, which is sometimes equal to the off-line connection time.”

(http://www.aa.com/content/uk/agency/partners/codeshares.jhtml)

Huh?

In its simplest form, codesharing works like this: You buy a ticket on American Airlines for a flight operated by Alaska Airlines along a route American otherwise does not serve. Both airlines are superlative major carriers (like most, if not all the carriers large and small in America today), so safety is not a concern. But what’s terribly confusing is just exactly who’s going to be providing that sumptuous meal of in-flight peanuts: American or Alaska?

Well, in the world of codeshare agreements, it’s American’s ticket, American collected your money, and American has an American Airlines flight number for you, but in reality it’s an Alaska Airlines flight operated by Alaska’s pilots and flight attendants over Alaska’s route system.

Up there on the departures board you’ll find your American Airlines flight number listed. But in a separate listing on the same board, there’s an Alaska Airlines flight number going to the same place. Only when you stare hard and realize they’re both going to be pushing back from the same gate at the same time does it begin to become clear that it is, in fact, the same flight — in this case, using a big white airplane with a large trademark Eskimo (actually an Athabaskan Native American) up there on the tail, smiling at you from under his parka.

So far, so good. You can live with that. After all, Alaska’s one of the highest-rated airlines in the country. But when you arrive at the airport, if you make the logical mistake of taking your American Airlines ticket to the American Airlines counter, you’ll discover that American’s folks can’t check your bags or fly you anywhere on that fare. In fact, they have to send you, dragging your bags, to the Alaska Airlines counter, where you discover that it was Alaska’s curbside baggage service you should have pulled up to, not American’s.

The key? If the reservationist (an increasingly rare creature separated from you by long phone delays during which you can listen to musical selections ranking about 300 on the Top 40 list) tells you the flight you’re about to purchase is a “codeshare” flight, listen closely when he or she tells you the vital information about “who is operating the flight.” If you buy over the Internet (which is what the airlines want you to do), look very closely to see who’s really flying the plane. The shorthand version? If Hotwings is flying the aircraft, go to the Hotwings counter, regardless of which airline sold you the ticket.

Confused? There are passengers by the hundreds (I’m being charitable here) confused by this every day.

So why do we passengers put up with it? Two reasons.

First, codesharing effectively merges your frequent flyer miles and programs, letting you use your built-up mileage from one carrier on several others (even though this can be even more confusing because each carrier “group” has its own rules and myriad exceptions).

Second, we put up with it because, thanks to Congress deciding back in 1978 that the airline industry is NOT a vital public service that should be regulated at least to a minimal degree, airline managements have to come up with any innovation they can to stay afloat in this Wild West version of competition. Codeshares add at least some profit to the industry’s sorely strained bottom line.

The airline industry argues that codesharing provides customer convenience because you can pretend to stick with your favorite airline yet fly on many others, but you’d be hard-pressed to find a groundswell of public enthusiasm for the practice. Until it evolves into the next stage, however, (mergers, acquisitions and massive global carriers with little loyalty to the United States), the best way to handle it is by asking careful questions before you buy, and knowing whose counter to head for.

http://abcnews.go.com/Business/FlyingHigh/story?id=865304&page=1#.UGA-8rKGrSg

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Page 111 are BA’s code shares (2007)

Conclusions
7.59 Based on the evidence of the capacity and cross-sectional fares analysis, as well as the
fares trend analysis taken from the case studies, some tentative conclusions can be
drawn.
7.60 In principle, we would expect parallel code-share agreements to lead to higher
capacity being provided on a route, as the code-share enables airlines to attract
connecting passengers; and if the airlines continued to compete for point-to-point
passengers on the parallel route, there should be no impact on fares.
7.61 In fact, the available evidence indicates that while code-shares may have led to
capacity being increased faster, this is not conclusively the case. There is stronger
evidence that code-share agreements lead to higher fares for point-to-point passengers,
although due to data limitations, this result must also be qualified. As explained above,
this could be a consequence of collusion, but could also be a consequence of the
displacement of point-to-point passengers by passengers making connecting trips.
7.62 Both the capacity analysis and the fares analysis points towards there being more
negative implications from code-share agreements on intra-European routes than on
long haul routes. This result may occur because:
• Parallel code-share agreements are less likely to expand the range of journey
opportunities available on an intra-European route, because there are fewer
regulatory restrictions on which airlines can operate services. Therefore, codeshare
agreements are less likely to lead to higher demand or higher capacity on an
intra-European route.
• Where two carriers code-share on an intra-European route, slot constraints may
prevent or limit the entry of new carriers even if the code-share agreement leads
to higher fares. This is more of an issue on intra-European routes than long haul
routes, because airlines need to obtain more slots, at reasonably even time
intervals and at both airports, in order to operate a service; for long haul services,
a new entrant usually only needs to obtain one daily pair of slots.
7.63 However, while the evidence from the case studies does indicate that in some cases
fare levels on code-shares have moved more similarly than on non-code-share routes,
the evidence is slight. Furthermore, on some intra-European routes, code-sharing
does not appear to have resulted in similar fares behaviour – for example on London –
Helsinki, where BA and Finnair historical fares trends are significantly different.
7.64 Overall, therefore, the evidence points to code-shares having the potential to result in
disadvantages for customers, particularly where other constraints, such as airport slots,
help them to act as barriers to entry. The evidence is, however, varied, and each case
needs to be considered on its own merits.