Airline Partnerships Are Confusing—Here’s What You Need to Know – Conde Nast Daily Traveler
A quick rundown of the difference between interline, codeshare, and frequent flier partnership.

In the Trenches: Do It Ourselves or Partner with Someone Else? – Intuit Small Business Blog
I’m debating how to deal with frequent flier redemptions.

As always, this year’s Phoenix Aviation Symposium was packed with great, thought-provoking discussion. A few of us were constantly posting updates on Twitter under the #PHX2012 hashtag. I’d suggest taking a look if you’re interested. But there were small nuggets that came out throughout the conference that I thought deserved a deeper look. First up is the issue of joint ventures and whether they might actually mean trouble for airline alliances.

Andrew Watterson, Vice President, Planning & Revenue Management for Hawaiian Airlines made a comment during the strategy panel that caught my attention. He explained that while Hawaiian is “outside an alliance, we sense the friction between joint venture partners and non-joint venture partners. I can’t imagine what that’s like inside the alliance.” In the end, he suggested that with airlines like JetBlue and Hawaiian (you could throw Alaska in there as well, domestically) offering partnering opportunities without an alliance, some members might start to think twice.

What’s the Difference Between an Alliance and a Joint Venture?
But first, we should back up. Let me explain the difference. Most of us know what airline alliances are. The big three are United-led Star Alliance, American-led oneworld, and Delta-led SkyTeam. These alliances are really focused on providing reciprocal benefits to members of each frequent flier program of the member airlines. You can earn miles (even elite qualifying miles) on all member airlines, and if you’re an elite member, you will get reciprocal benefits like priority boarding, lounge access, etc. There is limited cross-upgrading opportunity between some members but that benefit isn’t a very strong one at this point.

These alliances, are full of independent airlines that still compete with each other, even though they may be partners. When US Airways flies from Philly to Chicago, it is going head to head with United in that market, for example. United and US Airways do codeshare, and that allows them to expand their reach, but it’s not a requirement to codeshare to be an alliance member. In other words, it’s a fairly loose commercial cooperation at its core.

A joint venture, however, is a different story. The idea there is that two or more airlines agree to put all revenues into a big pot for travel in a geographic area. The money is then divided up between the airlines depending upon how much they fly. A good example of a powerful one today is the Atlantic Plus Plus venture led by United and Lufthansa. This also includes Lufthansa-owned Austrian, bmi, and Swiss as well as Air Canada.

The idea is simple. Since governments like that of the US have not been willing to allow mergers across borders, a joint venture is as close as airlines can get to merging under the law. Today, if you fly on a Lufthansa airplane or a United airplane, United shouldn’t care. It works with Lufthansa to coordinate schedules and pricing, and it splits the revenue up. (It’s not as simple of a split in actual terms, because there are adjustments depending upon a variety of factors but let’s not make this too complex.)

Now think about an airline like US Airways. US Airways is a member of Star Alliance, but it is not a member of the joint venture. While US Airways can connect people from all over the US to Europe, Lufthansa now has less incentive to put people on US Airways. Why not connect passengers within the US on United instead where it stands to gain? Lufthansa can keep more of the revenue that way, in all likelihood. It can also work with United to study traffic flows and arrange top connections to be as convenient as possible from a scheduling perspective. US Airways theoretically loses out.

I say theoretically, because in reality US Airways is doing just fine. In fact, I asked President Scott Kirby about this at media day last week. He responded that they are happy to consider joining the joint venture, but their transatlantic flying is doing so well that they would end up having to pay more out because of that. That’s not ideal, but if it starts seeing less benefit from the alliance, you would think it might have second thoughts. Certainly it might think twice about joining today if it weren’t already a member.

Getting Back to the Point . . .
But let’s get back to Hawaiian’s point. There is a feeling of haves and have nots. While US Airways is an incredibly rational airline that looks at numbers above all, not all alliance members will feel that way. There is bound to be a tension that grows when those airlines that feel left out think they deserve to be a part of the “in crowd.”

In the past, even those emotions were too hard to act on since the revenue from cooperation was so good. But if there is an alternative, then does that sway things? The airlines that use this, as JetBlue calls it, “open architecture” which allows for partnerships with any interested airline, have been growing quickly. They provide more schedule options and feed opportunities each day. So at some point, do airlines get fed up with alliances and start going it alone?

It’s incredibly rare for an airline to leave an alliance unless it goes under, but it has been done. Aer Lingus was a member of oneworld but is now independent. It has been aligning itself more closely with JetBlue to the point where there has been discussion about JetBlue buying a stake. There was a discussion last year about Aer Lingus rejoining an alliance, but the costs to join are steep and Aer Lingus didn’t think it could get enough benefit. With more successful niche airlines looking to go it alone, the temptation to stay out of an alliance may very well become a desirable option, especially as core members get closer and closer via joint ventures.

This isn’t the airline I signed up for – CNN Out of the Office
This week, I tackle codesharing. I find codsharing to be incredibly confusing with limited consumer benefit, but that’s not going to change anything. I gave some tips for those traveling on codeshares.

GUEST POST: Cranky Flier Mulls Service Prospects for BWI Airport – Aviation Queen
In case you missed it, Benet Wilson is now writing her own blog at aviationqueen.com. I filled in this week with a guest post on prospects for more service at the Queen’s hometown airport of BWI.

In the Trenches: Learning How to Use an Assistant – Intuit Small Business Blog
The idea of having an assistant sounds good, but really, I don’t think I’d even know where to start.

Earlier this week, I published a column on CNN.com talking about codesharing. You all know the practice. It’s when one airline sells flights on another airline under its own code. This column turned into a great discussion on airliners.net, and now I’m bringing it here. Why? Because I don’t see a single consumer benefit to codesharing. Anyone else believe otherwise?

I suppose I should break this down into two different pieces, because there is one aspect of codesharing that does make sense to me: the regional airline relationship. If you fly Delta from LAX to Phoenix, you’re actually flying on SkyWest Airlines operating as Delta Connection. SkyWest doesn’t sell flights on its own. It’s just a hired service-provider, and that type of codesharing I understand. The operating airline isn’t equipped to really handle ticket sales and shouldn’t have to be. It’s really operated on behalf of the larger partner, and that larger partner’s policies and procedures increasingly apply. So let’s exclude this type of codesharing from the discussion.

It’s the other type of codesharing that I’m targeting here, and I would love to see it disappear completely. You know what I’m talking about. It’s when you buy a flight on United but actually fly on Lufthansa. Or you buy a ticket on US Airways and find it’s actually on United. These types of codesharing relationships have grown dramatically over the years to the point where airlines have started to run out of 4 digit flight numbers. (Ever wonder why you see flights with the same number for a roundtrip? It’s to conserve on numbers.)

From a sales perspective, this makes sense. Consumers are more likely to want to buy a ticket on a single airline and at least at one point, there was bias in the reservation systems to display single-airline itineraries first. This practice also allows airlines to double their presence on screen. Instead of one flight display of American from LA to London and British Airways to Athens, they get two. You’ll now see one option on American and the other on BA, even though they’re the exact same flights. This creates a ton of clutter and really adds no value.

But is there any true advantage to a passenger? I think not. Here are some of the suggested advantages and why they aren’t real.

1. You can check your baggage all the way through on codeshares instead of having to claim and re-check in the middle.
   This may be true, but this benefit is in no way limited to codeshares. Most airlines have ticketing and baggage agreements with other airlines to be able to check bags through. For example, if you’re flying United to Paris, you can check your bags through to a connecting flight on Air France even though the two have no commercial relationship involving codesharing.
2. But then I’m subject to a bunch of different baggage policies?
   It’s actually no different. The operating airline sets the baggage policies, so even if you’re on a codeshare, that doesn’t really change anything.
3. You can buy a single ticket on a codeshare but you’d have to buy two tickets otherwise.
   That’s not true at all. There are interline agreements that allow you to buy one ticket across airlines, regardless of the code.
4. But it’s a lot more expensive when you buy a ticket on separate codes.
   That’s airline policy, not a given fact. Airlines may provide lower fares that are booked on their codes, but there’s no reason they can’t do the same for interlining. I was just helping one client go from Geneva to LA and found the best business class option to be on Swiss to London and then Air New Zealand to LA. No codesharing involved, but the price was competitive.
5. When I buy a ticket on one airline’s code, then I can go to that airline to take care of everything.
   This is one of the more dangerous aspects of codesharing. People think the airline they buy from is in charge of everything, but that’s only true when convenient. When it comes to ticketing, whichever airline sold the ticket is the one responsible for changes. It doesn’t matter if it’s a codeshare or not. I just helped someone who had a problem with an Iberia flight on a ticket purchased via Qantas. Iberia said it couldn’t help, and we had to talk to Qantas to get it fixed. But when it comes to things like lost baggage, it goes to the operating airline. The codeshare gives an illusion of responsibility when that’s really not the case.
6. I can earn my miles on codeshares but not otherwise.
   This actually has nothing to do with codesharing but is really a separate business agreement. Any two airlines can provide any level of frequent flier reciprocity regardless of code. If they choose to do otherwise, that’s a business decision.

While there are no real benefits, there are plenty of downsides. First and most important is the confusion. People simply don’t know who they’re actually flying. Sure, it’s disclosed (required by law in the US) but people don’t always read every detail. It also adds a ton of clutter. One of the biggest complaints on airliners.net was that codesharing fills departure screens with a ton of flight numbers for the exact same flight so it just makes it more time-consuming to get the information you need.

There’s also the issue of product consistency. Airlines may codeshare but that says nothing about consistency between the products onboard. You might buy a ticket on British Airways, but if you end up on an Iberia flight, you’re going to be disappointed with what you get.

I should clarify that I do see benefits from alliances. They set a basic standard (admittedly, very basic) about what you can expect across the participating airlines in terms of mileage accrual, elite benefits, etc. They also have been working to locate closer to each other in large hubs to make for an easier connection. But codesharing isn’t necessary or even really that helpful to making an alliance work. If you buy a ticket that shows Delta the whole way versus a ticket that has Delta connecting to Air France, the alliance-benefits would remain the same. And if they don’t, that’s a business issue that can be fixed.

In the end, I see no good reason for codesharing, and I wish it would just disappear. Anyone care to argue for why codeshares are good? Am I missing something?

[Photo via Flickr user Samuel P/CC 2.0]

What do airline alliances mean for you? – CNN Out of the Office
Airline alliances aren’t necessarily all they’re cracked up to be. There are some benefits, but not nearly as many as you might expect.

In the Trenches: Changing up the Routine – Intuit Small Business Blog
Making things run better at Cranky Concierge is always a good thing. I just need to make sure I don’t shoot myself in the foot.