Codeshare agreement

A codeshare agreement, also known as codeshare, is an aviation business arrangement in which two or more airlines share the same flight. Sharing, in this sense, means that each airline publishes and markets the flight under its own airline designator and flight number as part of its published timetable or schedule.

A seat can be purchased on each airline’s designator and flight number, but is operated by only one of these cooperating airlines, commonly called the “operating carrier” or more precisely (and in line with definitions in IATA Standard Schedules Information Manual): “administrating carrier”. The term “code” refers to the identifier used in flight schedule, generally the two-character IATA airline designator code and flight number. Thus, XX123 (flight number 123 operated by the airline XX), might also be sold by airline YY as YY456 and by ZZ as ZZ9876. Airlines YY and ZZ are in this case called “Marketing airlines” (sometimes abbreviated MKT CXR for “marketing carrier”).

Most of the major airlines today have code sharing partnerships with other airlines, and code sharing is a key feature of the major airline alliances. Typically, code-sharing agreements are also a part of the commercial agreements between airlines in the same airline alliances.

This commercial practice covers three concepts: correspondence platforms, market sharing and multiplication of codes.

In 1967, Richard A. Henson joined with US Airways predecessor Allegheny Airlines in the nation’s first codeshare relationship. The term “code sharing” or “codeshare” was coined in 1989 by Qantas and American Airlines, 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.

Under a code sharing agreement, the airline that administrates the flight (the one holding the operational permissions, airport slots and planning/controlling the flight and responsible for the ground handling services) is commonly called the operating carrier, often abbreviated OPE CXR, even though the IATA SSIM term “Administrating carrier” is more precise. The reason for this is that a third carrier may be involved, typically in the case that the airline originally planning to operate the flight needs to hire a subcontractor to operate the flight on their behalf (typically a wet lease, meaning an aircraft is leased with crew and all facilities to fly, commonly due to capacity limitations, technical problems etc.) In this case, the airline carrying the passenger should be designated the operating carrier, since it is the one carrying the passengers/cargo.

When a flight is sold under several designators and flight numbers as described above, the one published by the “Administrating carrier” is commonly called a “prime flight” (as opposed to a codeshare marketing flight).

Correspondence Platforms
The big airlines often operate from platforms or hubs. These airports are also used by regional airlines whose passengers are often in correspondence with flights of large companies. By negotiating bilateral agreements between them, the regional companies were able to use the AITA code(bigram) of the big companies and thus propose their flight under their name. For the first-tier airline, this practice allows for a higher number of destinations in a region and attracts traffic on its lines by offering scheduled connections. For the regional company this practice allows him to benefit from the image of the company of the first level. The passenger finds advantages in terms of schedules and connections but is often forced to use a flight in a “small plane” while he thought to travel in ” jet “The complaints of the consumer associations led to the posting of the name of the company which actually provides the link on the ticket, and with the extension of the correspondence platform system, this practice has also developed outside. the United States.

Market Sharing
The air transport market is highly regulated and the opening of lines is often the subject of inter-state agreements, in the absence of so-called open skies agreements (such as the one negotiated in 2005 between the European Union and the European Union). United States ). This is the case, in particular, in Europe where many national companies operate. Faced with the impossibility for economic or regulatory reasons to increase the number of flights on a route, they decided to share the market by offering all the flights of a line under a double code (bigrammes of each of the companies are together).
Agreements between companies can be grouped into two main families: the headquarters block and the “sell and report”.

In the case of the “block”, each of the companies sells part of the available seats according to a pre-arranged distribution by contract between the partners, which can also be defined as the chartering of part of the airline of the operating company by its partner company.
In the case of “sell and report”, each company has access to all the aircraft seats and can sell them on its own terms (within the limits of the commercial policy agreements agreed between the partners).
For the passenger this practice has the advantage of increasing the frequency of flights available but adds to the price confusion because the participating companies can offer different rates for the same service. This practice has become common in alliances such as SkyTeam, including for local flights – for example, Aeromexico is able to sell flights between Nice and Paris on the Air France shuttle. Note, however, that this example is only possible in continuation of a flight to a destination for which Aeromexico has traffic rights, for example a Paris-Mexico.

Code multiplication
Since the creation of airline alliances, they often offer the same flight under several numbers. Strictly speaking, it is no longer about code sharing but rather a multiplication of code. This practice has become very common.

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

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.

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 unserviced 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 zero.

Types of Codeshares
Several types of codeshare exist, commonly three types:

Block space codeshare: A commercial (marketing) airline purchases a fixed number of seats from the administrating (operating/prime) carrier. A fixed price is typically paid, and the seats are kept away from the Administrating carrier’s own inventory. The marketing airline decides on their own which booking classes the seats are sold in (the block of seats are optimised just like another aircraft cabin).
Free flow codeshare: The airlines’ inventory and reservation systems communicate in real-time by messaging, commonly IATA AIRIMP/PADIS messaging (TTY and EDIFACT). A booking class mapping is defined between the airlines. No seats are locked to any of the airlines, and any airline can sell any number of seats.
Capped free flow: Basically the same as above, but a capping (max number of seats) are defined for each of the marketing airlines participating in the codeshare with the Administrating (operating/prime) carrier.

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). Criticism has been leveled against code sharing by consumer organizations and national departments of trade since it is claimed it is confusing and not transparent to passengers.

Air-rail alliances
There are also code sharing agreements between airlines and railway companies. These are more formally known as an air-rail alliance, but more commonly known as “Rail & Fly” due to the popularity of the Deutsche Bahn codeshare with many airlines. They involve some integration of both types of transport, e.g., in finding out the fastest connection and allowing transfer between plane and train using a single ticket. This allows passengers to book a whole journey at the same time, often for a discounted price compared to separate tickets.

Source from Wikipedia