Code Sharing in the Airline Industry

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» Posted by on May 3, 2014 in Airlines | 0 comments

Code Sharing’ is the industry term for an agreement that allows airlines to sell one another’s flights as if they were their own.  The ‘Code’  is identified by two letters on the ticket so that the airlines can identify who booked the reservation.

After September 11, 2001, there was a decreased demand for air travel and cuts in schedules had to be taken. Code Sharing was a way that airlines could attract customers even as they cut their networks.

Affiliations among carriers were formed to expand flight networks and to keep cost low and, with current financial struggles, code sharing is supposed to help sell more tickets. Code Sharing agreements require approval of regulators.

The text book states on page 49 that “This Offers a Competitive Advantage to Carriers…” And this became true when the Code Sharing agreement between Delta, Northwest and Continental was formed about six years ago.

The U.S. Department of Transportation (DOT) also allowed a similar agreement between United Airlines and US Airways around the same time. These Code Sharing flights opened up flights to and from the unserved, underserved or smaller communities.

DOT put restrictions on the carriers to address competitive concerns raised by these joint ventures. One was to restrict the offering of joint bids to corporate customers and travel agencies. Another was that the carriers could not coordinate or agree among themselves on matters such as fares, route entry / exit, or capacity.

For Code Sharing, both the selling airline and the operating airline must disclose that a flight is a code share. This information is also noted on the ticket and boarding pass.

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