Once upon a time, code-sharing was used to link mainline carriers with their regional airline networks. It started as a way to mislead consumers into thinking that the airline taking them from airport to airport was the same company.
In many cases, the regional airlines and the mainline carriers are not from the same company. Code-sharing is a contractual relationship where multiple carriers are disguised to appear to be a single large airline.
This marketing slight-of-hand allowed American Airlines, United, Delta and USAirways to display larger networks on their system maps and claim additional airports served. Admittedly, the mainline carriers noted in the fine print that various cities were served by their associated regional carriers.
However, the public was led to believe or to easily assume, that the regional airlines were some type of subsidiary of the mainline carrier. In some cases they were; in others, they weren’t.
Then code-sharing went international when KLM got permission to code-share with Northwest Airlines and eventually received antitrust immunity that allowed these two airlines to coordinate flights. Soon every airline wanted in on this action that was beefing up Northwest’s bottom line and making the airline appear to be bigger than it actually was.
Even though code-sharing was conceived to deceive the public into thinking that mainline airlines were larger than they actually were and that they had more destinations than they actually served themselves, somehow the Department of Transportation (DOT) didn’t see this as an unfair and deceptive practice.
Eventually, DOT grew concerned enough to require that mainline carriers who had flights operating under their flight numbers inform passengers that, in fact, another airline was operating the flight. That is the genesis of the “Flight Operated by X Airline” that is seen on many websites.
Even though the flight may be marketed by Airline A and has the airline codes of Airline A, it may be flown by Airline B, a totally different airline with a totally different set of rules and a totally different contract of carriage. There is no way for consumers to know what they are buying and what contract of carriage they are “signing” when they purchase their tickets.
If passengers are confused, that is good news for airlines. Airlines end up with fewer complaints because consumers have no idea of where to go to complain.
Today, the relatively benign code-sharing between mainline airlines and their regional partners has become a multinational set of interlocking airline arrangements that leaves travel experts confused, let alone everyday consumers.
From the early international KLM/Northwest code-shares, such arrangements have grown to incorporate hundreds, of not thousands of airline routes. Plus, airline alliances have further muddied the water with joint ventures that are not owned by any single airlines, but by groups of airlines with profits being shared according to some formula.
And, it is getting worse.
US Airways already has started their code-sharing with South African Airways and will soon launch another agreement with Avianca, the Colombian carrier which is the subsdidary of AviancaTaca Holdings.
For American, the carrier has started code-share agreements with TAM Airlines of Brazil and LAN Colombia based in Bogota. Alaska Airlines will start code-share with AeroMexico in 2013 with travelers able to use the same frequent flier miles for both carriers.
And finally, Virgin America has started a code-share with Singapore Airlines.
The airline seat as a commodity
Ironically, airlines are claiming that they need to hide their ancillary fees from travel agents and the big central reservation systems because they deny the airlines the ability to market their airline seats as unique to their airline.
At the same time airlines decry commoditizing their precious airline seats, they are enhancing and expanding code-sharing whole heartedly — the ultimate definition of commoditization.
On one hand, airlines claim that a seat on United is very different from a seat on Delta, which is different from a seat on USAirways. Hence, no travel agent can hope to properly differentiate the uniqueness of their mainline seats.
On the other hand, through sales channels, airlines show that a seat on Lufthansa or Swiss or USAirways is exactly the same as a seat on United if United is selling the ticket with its airline code on the flight. Or, a business-class seat on Delta is identical to a business-class seat on Air France or KLM or Alitalia when Delta slaps their airline code on the flight.
Using Alice-in-Wonderland doublespeak, the airlines will claim that their seats are unique products, impossible to compare properly across airlines, but identical when it suits them.
It seems that airlines need to make up their minds. They can’t have it both ways.
DOT should ban the practice of code-sharing. The practice only serves to confuse passengers and deceive them when making reservations. The old world of interlining would serve the same purpose, as it used to for decades before the airlines began code-sharing.
What are your thoughts? Does code-sharing serve any purpose other than misleading customers? Is there a legitimate customer-service reason to allow code-sharing, or does it only serve the airlines’ marketing efforts? What are the benefits for passengers that can only be offered through code-sharing?
Charlie Leocha is the President of Travelers United. He has been working in Washington, DC, for the past 14 years with Congress, the Department of Transportation, and industry stakeholders on travel issues. He was the first consumer representative to the Advisory Committee for Aviation Consumer Protections appointed by the Secretary of Transportation from 2012 through 2018.
