Air India to expand code share partnerships

A code share is marketing agreement between two airlines which helps enhance revenue of an airline

Air India will begin discussions with Star Alliance member-airlines, including United, Air Canada and Lufthansa, for code shares on domestic and international routes. Last week, the Star Alliance board had decided to commence Air India’s integration into the 28-member alliance.

A code share is a marketing agreement between two airlines that helps enhance an airline’s revenue. It allows an airline to put its code on a flight operated by a partner airline and sell tickets on routes on which it does not have operations. With Air India joining the Star Alliance, the carrier’s frequent flyer programme will be integrated with other Star Alliance members’ loyalty programmes, an attractive option for business travellers. “We will be talking to Air Canada, United, Lufthansa, Singapore Airlines and other airlines for code shares. These discussions will happen concurrently, along with the integration process. We would like to code share with Air Canada because we have stopped our flights to Canada,” said an Air India official.

Currently, Air India has code shares with a few Star Alliance members such as Lufthansa, Singapore Airlines, Swiss, Turkish Airlines, Egypt Air, Ethiopian Airlines, South Africa Airways and Asiana Airlines. But most existing agreements cover international routes, not Air India’s domestic network. For instance, Air India puts its code on Lufthansa-operated flights to Germany, Europe and the US, but Lufthansa does not put its code on Air India’s domestic flights. The exceptions are South African Airways, Turkish Airlines and Egypt Air, which have code shares on a few of Air India’s domestic routes.

A foreign airline’s decision to code share on Air India’s domestic routes will be guided by its commercial interests. Lufthansa is said to be eager to code share on some Air India routes.

What’s a code share alliance?

Full-service airlines build networks in two ways — deploying own capacity or partnering other airlines through commercial agreements. These include interline agreements and code sharing, which allow an airline to sell tickets on flights operated by other airlines. While interline is an arrangement to sell tickets, a code share is like a commitment for it. A simple interline allows any two International Air Transport Association (IATA) airlines to sell tickets for each other under an agreement. Such agreements are based on IATA fare rules and revenue-share conditions. Airlines sign special prorata agreements on specific routes, under which two carriers agree on a specific revenue share on sale. In a code share, the marketing airline places its code on flights operated by the other. In terms of revenue, a code share gives an airline better options than an interline agreement, as it allows sale of tickets in more fare slabs. Frequent flyers earn miles in a code share alliance, unlike in an interline arrangement.