Codeshare agreement
Code sharing is a business term which was first originated in the airline industry in 1990 when the Australian airline, Qantas Airways and the US's American Airlines combined services between an array of US domestic cities and Australian cities. The code share was part of a "cooperative services" agreement between the two carriers before the various airline alliances were formed. It refers to a practice where a flight operated by an airline is jointly marketed as a flight for one or more other airlines. Most major airlines today have code sharing partnerships with other airlines, and code sharing is a key feature of the major airline alliances.
The term "code" refers to the identifier used in flight schedule, generally the 2-character IATA 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.
Under a code sharing agreement participating airlines can present a common flight number for several reasons, including:
- 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.
- 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.
Under a code sharing agreement, the airline that actually operates the flight (the one providing the plane, the crew and the ground 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.
Competitive concerns
In Global Distribution Systems, such as Amadeus, Galileo, Worldspan, or Sabre, this results in the same flight details, except for the flight number, being displayed on computer screens excessively forcing other airlines flights to be displayed on following pages where they may be missed by passengers searching for required flights.
Much competition in the airline industry revolves around ticket sales (also known as "seat booking") strategies (revenue management, variable pricing and Geo-marketing). Most travelers and travel agents have a preference for flights which provide a direct connection. Code sharing gives this impression. Computer reservations systems (CRS) also often do not discriminate between direct flights and code sharing flights and present both before options that involve several isolate stretches run by different companies.
Criticism has been levelled against code sharing by consumer organizations and national departments of trade since it is claimed it is confusing and not transparent to passengers, but thus far without any success.
Rail & Fly
There are also code sharing agreements between airlines and rail lines also known as Rail & Fly systems[1]. They involve some integration of both types of transport, e.g., in finding out the fastest connection, allowing exchange between an air ticket and a train ticket, or a step further, the air ticket being valid on the train, etc. See also list of IATA-indexed train stations. In Europe these Rail & Fly systems are used to divide markets by selling these combination tickets abroad for a lower price to attract more customers. The systems also prevent local customers from buying these much cheaper tickets as the customer is only allowed to board the plane with a valid train stamp from a station outside the country.
See also
- Change of gauge (aviation), another potentially confusing practice