Interline and codeshare: confusing for passengers, money makers for airlines

AeroTime is excited to welcome Koen Karsbergen as our columnist. Co-founder and Principal of Air52 Aviation Consultants, Karsbergen brings more than two decades of experience in airline management and strategy to his columns.  

Through Air52, Karsbergen assists airlines, airports, and industry stakeholders with practical solutions for complex challenges, drawing on his extensive background in feasibility studies, fleet and network planning, and airline startups. He also contributes to IATA training courses and serves as faculty for Aviation MBA programs. 

The views and opinions expressed in this column are solely those of the author and do not necessarily reflect the official policy or position of AeroTime.  

Picture this: you’ve just booked what seems like a simple trip, only to find yourself juggling multiple airline names, deciphering various flight numbers, and trying to make sense of conflicting baggage policies. Sound familiar? Welcome to the fascinating world of interline and codeshare agreements. 

These partnerships often leave passengers scratching their heads, yet they’re a goldmine for airlines. They represent a clever way for carriers to expand their reach and boost profits without the hefty costs of operating more routes or having extra planes.  

But what’s really going on behind the scenes? Why do airlines love these arrangements so much? And how do they manage to be both a source of passenger puzzlement and a key to airline profitability? Let’s unravel this aviation enigma. 

Decoding agreements  

To decode these agreements, let’s start with some aviation basics. For every flight we identify: 

The Operating Carrier (OC): The airline flying the plane. 
The Marketing Carrier (MC): The airline selling the flight under its code. 
The Validating Carrier (VC): The airline issuing the ticket, also known as the Ticketing Carrier. 
In an ideal world, all three roles would be played by the same airline. Imagine booking a United flight, on a United plane, with a United-issued ticket. Simple, right?  

But the aviation world is rarely that straightforward. Enter interline and codeshare agreements, and suddenly this simplicity vanishes like a contrail in the sky. These partnerships add layers of complexity to airline operations and can leave passengers feeling like they need a decoder ring to understand their itinerary. 

So why do airlines embrace this complexity? And how do these agreements work in practice?  

Interline agreements are like a handshake between airlines, allowing them to accept passengers with tickets issued by their partners. It’s all based on the Multilateral Interline Traffic Agreement (MITA), a set of rules overseen by IATA that govern the principles of these partnerships. 

Here’s where it gets interesting for passengers: interline agreements mean you can book a single ticket for a journey involving multiple airlines. For example, you might buy a British Airways ticket from London to Bogota via Madrid, with the Madrid-Bogota leg operated by Iberia. One ticket, two airlines, and hopefully, a seamless journey. 

Sounds great, right? Well, mostly. These agreements offer some fantastic perks for travelers: 

More destinations and routes to choose from 
Often lower fares than booking separate tickets 
Protection if you miss a connection due to a delay 
But there’s a catch. Interline agreements can also lead to some head-scratching moments: 

Inconsistent baggage policies between airlines 
Different check-in processes and deadlines 
Confusion about which airline to contact when things go wrong 
A win-win for airlines 

For airlines, though, it’s a win-win. They get to expand their network and potentially boost frequencies on existing routes without the need for extra planes, crew, or those precious airport slots. It’s like having your cake and eating it too – more reach, more passengers, all without the usual hefty costs. 

And even better, by adding new destinations to their network, interlining allows airlines to carry passengers who would otherwise never have flown with them. Let’s go back to our London to Bogota example. Since British Airways (BA) doesn’t fly to Bogota, without the interline agreement, that passenger would never have flown BA. But with the agreement in place, BA gets the revenue for the London to Madrid leg, and Iberia picks up the Madrid to Bogota portion. It’s like they’re playing a game of aviation tag-team! 

In fact, before the pandemic shook things up, IATA estimated that interline travel was bringing in a whopping $52 billion in annual revenue for the industry. That’s a lot of motivation to keep these partnerships flying high! 

Now, just when you thought you had a handle on interline agreements, along come codeshares to add another layer of complexity. Codeshare agreements are like interline agreements on steroids. They allow airlines to slap their code on flights operated by their partners.  

Imagine this: You book an Air France flight from Paris to New York. Simple enough, right? But wait! That same flight is also being sold by Delta as a Delta flight and by KLM as a KLM flight. Three different flight numbers, one actual plane. It’s enough to make your head spin! 

For passengers, this can be a real head-scratcher. You might book what you think is a Delta flight, only to find yourself on an Air France plane with Air France crew. Suddenly, you’re not sure whose baggage policy applies or whose frequent flyer program you should be claiming miles with. 

But for airlines, codeshares are like striking gold. They offer even more benefits than interline agreements: 

Better visibility in reservation systems (hello, more bookings!) 
A presence in markets they don’t fly to 
The chance to piggyback on their partners’ brand recognition 
Some nifty cash flow advantages 
These partnerships let airlines dramatically expand their reach without the eye-watering costs of new routes. They can fill seats that might otherwise fly empty, maximizing their revenue potential across a broader network. It’s a strategy that allows airlines to grow their market presence without the massive investments typically associated with expansion, or where prevented from doing so by laws and regulations. 

But the world of airline partnerships is evolving faster than you can say “fasten your seatbelts”. The industry is constantly changing, driven by new consumer expectations and technological advancements. 

Remember when your airline ticket included everything but the kitchen sink? Well, the rise of Low-Cost Carriers (LCCs) changed all that. They introduced “unbundling,” letting passengers pick and pay for only the services they want. Great for travelers, but a big challenge for those decades-old interline and codeshare concepts that weren’t designed for this a la carte approach. 

A radical overhaul  

To keep up, the industry is going through a radical overhaul of distribution concepts. New Distribution Capability (NDC) and OneOrder are two big initiatives aimed at dragging airline distribution systems into the 21st century. The goal? Among others, enabling more flexible and customer friendly interline and codeshare arrangements. It’s like giving the whole system a major upgrade. 

And just when you thought it couldn’t get any more interesting, along comes “virtual interlining”. This new kid on the block is shaking things up in a big way. From a passenger’s perspective, it looks just like a traditional interline ticket. You book what seems to be a seamless journey with connecting flights. But here’s the twist: behind the scenes, you’re buying two separate tickets, plus an insurance policy. 

This insurance is the secret sauce of virtual interlining. It’s there to compensate you if you miss your connection. Remember how with traditional interlining, airlines are obligated to get you to your final destination if you miss a connection due to a delay? Virtual interlining recreates this protection, but through insurance rather than airline agreements. 

Worldwide by easyJet has been pioneering this approach since 2017. What’s really exciting is that virtual interlining isn’t just connecting low-cost carriers. It’s also creating connections between budget airlines and traditional network carriers. It’s like breaking down the barriers between different airline business models.  

In addition, the industry has recognized that interline agreements go above and beyond the traditional and highly standardized airline-airline model. Other partnerships and customized agreements, including intermodal, should be supported. The industry is therefore moving to more customized arrangements, including ancillary revenues and different settlement conditions. To facilitate these changes, the Standard Retailer and Supplier Interline Agreement (SRSIA) has been drafted. 

An intricate web of partnerships  

So, what’s the takeaway from all this? Interline and codeshare agreements aren’t going anywhere. They might keep confusing passengers for a while yet, but they’re just too profitable for airlines to give up. The challenge will be finding ways to keep these partnerships humming along while making things smoother for passengers. 

For aviation geeks like us, all these developments are like watching a thrilling movie. They give us a peek into the complex, fascinating world of airline economics and operations. As passengers, understanding these agreements can help us navigate the sometimes-baffling world of air travel a bit better. And if you’re in the industry? Mastering these partnerships while keeping passengers happy will be key to staying ahead in the ultra-competitive aviation game. 

So next time you’re booking a flight and find yourself puzzling over airline codes or connection policies, remember that behind all that complexity is a web of partnerships that keeps the global aviation industry in the air. It might be confusing, but it’s amazing when you think about it. After all, it’s these intricate agreements that allow us to jet off to virtually any corner of the globe.  The post Interline and codeshare: confusing for passengers, money makers for airlines appeared first on AeroTime.

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