Delta Finally Brings Back the Part of an Interline Agreement with American That Matters Most

It has been more than two years since Delta effectively killed its interline agreement with American. Now, after several painful operational messes, Delta has finally agreed to bring the most important pieces of that deal back to life. Going forward, if Delta has problems and needs to put passengers on American flights, it can once again do it. The reverse is true as well. Considering how long it’s been since the agreement was cut and how long it’s been since the talks to reinstate started, this doesn’t seem like it was an easy thing for Delta to admit was necessary. But it is in the best interests of Delta’s customers, so we should celebrate the airline finally doing the right thing.

I know I’ve explained this before, but it’s worth including in this post. An interline agreement allows three basic types of cooperation between two airlines.

  • Airline A can sell tickets with Airline B flight segments on them (and vice versa)
  • Airline A can check bags through to Airline B flights (and vice versa)
  • Airline A can reaccommodate disrupted passengers by sending them to Airline B on an agreed upon rate (and vice versa)

This agreement allows funds to be settled up by the industry’s clearinghouse on the back-end after travel is completed. It’s an ancient airline industry function that has been reliably used for decades.

Between Delta, American, and United, the first two bullet points aren’t really a big deal. Those kind of agreements matter in complementary networks where you may want to feed passengers to another airline to complete a journey. Think about how JetBlue and Alaska feed foreign airlines at their US gateways. Even a big airline like Delta can benefit from this type of agreement because it can’t fly everywhere. For example, we just sold a ticket at Cranky Concierge that was on Delta connecting to ANA in Tokyo to get to Okinawa. But between Delta, American, and United, there’s more overlap than anything else. It’s potentially convenient to book American one way and Delta the other and put that on the same ticket, but most of the low fares on these guys aren’t combinable in that way anyway. It’s nearly always going to be cheaper to just book the one ways separately. Further airlines won’t check bags to each other outside of their alliances unless everything is on the same ticket.

It’s really that third bullet point that matters the most. There are industry standard rates that airlines use to settle up when they send a passenger over to another airline when there are operational issues (delays, cancellations, etc). And up until 2015, Delta, American, and United all used this process with each other frequently.

Back in 2015, Delta was feeling pretty good about itself. Its operation was running rather well while American and especially United were struggling. Delta looked at its interline agreements with both carriers and thought it had the upper hand. It decided to use its leverage and squeeze more money out of the other two. That worked for United, which caved to Delta’s demands. But American? Not so much.

I can’t say that approach made much sense to me. After all, Delta was benefiting by filling up seats at the last minute that would have otherwise gone empty. Sure there are some operational headaches involved, but on the whole, it should have benefited Delta nicely.

Over the last couple of years, Delta continued to have a great operation, but American and most notably United began to creep up. While Delta never fell off a cliff, it had some very public breakdowns on top of the regular weather issues that can cause problems from time to time. There was August 2016’s power outage at Delta’s operations center that caused the airline to melt down. Then there was last January’s computer outage that grounded Delta flights. Let’s not forget April 2017’s big Atlanta thunderstorm event which caused problems for days. Not that they could care less, but at the time I made a plea on the blog for the airlines to bring back their agreement. I kept up my quiet, meaningless campaign.

I understand that after these events, Delta started to believe in the importance of having the ability to put people on American. The airline approached American to open up talks, but for some time, there was no agreement. And of course, more problems occurred. Most recently there was the fire at Atlanta’s airport that caused the power to go out, obviously impacting Delta more than any other airline. At the time, I said this:

While the local passengers in Atlanta were screwed no matter what, Delta could have put the person flying from, say, Richmond to Austin on an American connection via Charlotte or Dallas/Ft Worth and kept them out of the Atlanta mess. That would have been good for the traveler, and it could have helped Delta to free up capacity for people who need to get in and out of Atlanta itself.

Around that same time, I started hearing whispers that an interline — or at least a reaccommodation — agreement was coming back imminently, but then… nothing. While the finish line may have been near, negotiations obviously hit a snag.

Here we are a month later, and an agreement has been reached. My understanding is that it’s at industry-standard rates, but this isn’t an industry-standard interline agreement, despite what you might interpret from American’s not-entirely-clear statement:

American and Delta have agreed to terms on a new interline agreement, which takes effect Jan. 24, and will give the airlines the option of rebooking customers onto each other’s flights in the event of unexpected flight disruptions. While this gives our team members another tool to re-accommodate customers, our priority will always be to keep customers on American or our alliance and joint business partners.

Delta explained it more clearly:

Delta and American Airlines will instate a new ticketing and baggage agreement designed especially for handling of customer reacommodation during irregular operations.

The new ticketing and baggage agreement will allow both carriers to rebook customers impacted by irregular operations on one another’s flights. In 2015, Delta terminated its legacy interline agreement with American. Other aspects of that legacy agreement, including fare combinability for travel agency and other third party sales, will not return.

In other words, this will only focus on helping passengers who are stuck and have no other options. I can only assume this was done this way so that Delta could still justify charging United more to have a proper interline agreement. But if I were United, I’d be marching into Atlanta asking for the same deal American got since the rest is just fluff.

As far as I’m concerned, all that matters is that Delta and American can now put passengers on each other when things go wrong. There’s less and less that differentiates the legacy carriers from the low cost carriers every day, but one difference that remains is the ability to put a passenger on another airline when something goes wrong. That’s valuable, and even if it took 2 years, I’m glad to see Delta finally recognize it.

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25 Responses to Delta Finally Brings Back the Part of an Interline Agreement with American That Matters Most

  1. Marty says:

    One small but interesting benefit of this is that when booking a government itinerary, the reservation can be ticketed all at once, which often helps to expedite the whole process. Very recently, I had an itinerary which was Delta on the inbound and American on the outbound, and when the travel authorization went for approval, it only had half the ticket cost on the authorization. I’ll bet this rectifies that issue.

    • ptahcha says:

      Nope. The agreement only addresses reaccommodation in case of irregular operations, and does not include ticketing or baggage handling in normal operations. In your scenario, it’s effectively 2 one-ways, which means there are 2 tickets still.

    • JAXBA says:

      @Marty – I work for a travel agency that handles a few gov travel accounts. I just tried booking AA and DL in the same PNR, and faring them together at the gov rate, but it didn’t work.

      I was able to price them separately, but not together. The last line of the quote from DL explains that “Other aspects of that legacy agreement, including fare combinability for travel agency and other third party sales, will not return.”

      No change there yet.

      (I was using Apollo).

    • Alex Hill says:

      Yeah, it’s frustrating that you still can’t combine DL and AA on one ticket in that case. Though at least government fares are refundable, so there’s a little less need to combine segments onto one ticket (eg AAA-BBB where AA is the contract carrier, BBB-CCC where DL is the contract carrier).

      • Davey says:

        Why would they? Delta is in the business of providing air transportation to passengers and cargo. Why on earth would Delta want to accommodate clients’ desire to split a ticket when it could just compel the traveler to fly Delta both directions at whatever competitive fare Delta charges.

        The regulated days prior to 1978, when anyone could issue a ticket on anyone else on one ticket, are over. Let’s get used to it! Delta will do what is in Delta’s best interests. Period.

        • Jason H says:

          It could just as easily compel the traveler to fly American both directions if their rt fare is better than Delta’s. Since fares and pricing are so variable and complicated there’s no way to generalize it or know for sure, but this seems like it would even out over the long term.

        • Alex Hill says:

          Because on government fares, the traveler is compelled to fly the contract carrier. If there are different contract carriers on different legs of a multi-city trip, the traveler has to use the appropriate carrier for each segment. For example, the contract carrier on SEA-DCA is Alaska but SEA-IAD is United. So I have a government fare round trip coming up where IAD makes sense one way but DCA the other way. If it was a route where the carriers are AA and DL, I’d have to have to separate tickets. That’s dumb.

  2. Tim Dunn says:

    The reality is none of us have any information about the details of the re-instated agreement so it is premature to think that Delta caved. There are sources that said that DAL wanted to raise the rates that it charged to carry AA passengers during IROPS when the agreement was cancelled because AA was sending passengers to DL at a far higher rate than the other way around. Further, AA’s rate of sending passengers to DL without bags was very high – which meant that DAL was having to delivery bags and taking a hit against its DOT bag claims.

    Given that Delta now has near the best bag handling statistics among all US carriers, it is highly unlikely that they reinstated this agreement unless the bag problem was fixed. No airline wants to end up stuck w/ paying for a bag expense and I doubt if Delta would have even agreed to a revised deal if there weren’t some protections in the agreement regarding a somewhat equal level of participation in the agreement on both sides and similar levels of bag deals.

    Further, it is easy to crow about Delta’s operational problems including the power outage but those are not recurring events and no business makes contingency plans based on one-time events. Just as with Delta’s IT outages, Georgia Power and the airport are fixing the problem.

    Finally, winter 2017-18 has been heavily skewed to the east coast with the SE getting far more snow and ice than normal – to the benefit of the center of the US including Chicago and Dallas. Weather patterns are not at all consistent from year to year and it is very possible that the rest of this winter could skew weather patterns back to norms which typically include several major disruptions at Chicago and Dallas.

    So, be careful about arguing that Delta needed this because of their operational problems which are driven by unusual weather patterns and one-off events that could happen to other airlines.

    The reaccommodation agreement is needed by both sides just as it is for DL and UA and it is a given that rates and conditions are reflective of what DL and UA also have. Stating that DL caved without being able to produce actual details is simply inaccurate.

    • NMP says:

      You are quite correct to identify the bag handling part of this as being one of the major stumbling blocks. While DL’s new bag handling automation has the promise of being superior it breaks down as soon as the bag is handed over to another airline – the tracking ends right there – unless there is a move to create system compatibility.
      The ability of anyone – any airline – to handle major weather or operational events, be they “one off” or recurring, separates good service from bad. When I see people making an effort to resolve problems – big or small – I give them credit, but continuing to display an ineptness to deal with major and disparate issues is poor. How do you train front line staff to handle the “one-off” situation? While it’s not always easy – it can be done

      • Tim Dunn says:

        absolutely… significant differences in operational performance between two airlines do impact irregular operations. DAL has invested an enormous amount of money in improved bag handling processes but they still run a better operation than any other airline.

        Based on the latest DOT report, DAL’s on-time for November was the best in the industry – even better than Hawaiian. At JFK, one of the biggest airports where AA and DL overlap, there was an 8 point difference in on-time between the two.
        https://www.transportation.gov/sites/dot.gov/files/docs/resources/individuals/aviation-consumer-protection/303556/2018januaryatcr.pdf
        For the past 12 months (back from November 2017), DL’s on-time was still 5 points better than AA’s. For Nov 2017, DL’s bag claim rate was the lowest of the industry and AA, along with WN, were below average while UA has moved above average.

        Delta just reported the second best operating margin in the industry for the most recent quarter behind WN and DL’s margins are closer to WN’s than they are to AA and UA. DL doesn’t make decisions based on emotion or hubris but rather hard data. In the case of the IROP agreement, statistics show that AA’s less reliable operation, even though vastly improved from 2 1/2 years ago, has a greater chance of sending passengers, possibly without bags to DL, than the other way around.

        Everyone benefits from the greatest amount of cooperation but there were real business reasons why AA and DL made the decision to not renew their ITB years ago and why they agreed to an IROP only ITB now.

    • CF says:

      Tim – You can speak for yourself, but I believe the information my sources gave me. And my understanding is that this is at industry standard rates.
      It’s entirely possible there was more discussion about how bags will be handled, that I don’t know, but everything I’m hearing is that Delta caved once it realized the value of the reaccomm agreement.

      Meanwhile on this point:

      “Further, it is easy to crow about Delta’s operational problems including the power outage but those are not recurring events and no business makes contingency plans based on one-time events.”

      I disagree completely. The point is to have the ability to recover more quickly when unexpected events occur. This is exactly the kind of thing that you want as a tool in your arsenal.

      • Tim Dunn says:

        Unless “information my sources gave me” is data from the analysis of both companies, it is hearsay.

        Further, given that American’s operational reliability has improved in 2 1/2 years, then the basis for the agreement itself has changed, no matter what anyone argues. AA still even on its own operation takes 80% more bag claims than DL does. While improved, it is not an apples to apples operation.

        And you and others that talk about DL’s operational disruptions don’t seem to want to consider that all of these operational statistics that the DOT publishes DO include the operational issues that DL has encountered. Perhaps things finally changed but despite IT failures and major weather impacts to ATL, DL still outperformed AA and most of the rest of the industry in operational reliability even when DL alone had operational issues.

        DL may very well believe that, given AA’s improved operational reliability, the financial impact to DL of having an IROP agreement with AA is more favorable than it was 2 1/2 years ago. I can assure you that DL didn’t cancel the previous agreement because of hubris but because of hard, cold numbers and they are reinstating it for the exact same reason. I enjoy reading your blog and it is very often driven by good solid data. Saying a decision is or was driven by hubris in the absence of verifiable data (which none of us will see, btw) is the complete opposite.

  3. JAXBA says:

    Excellently written article, and your graphic skills are perfect again.

    Just to mention the part below: I’m sure you already know, but sometimes the agreement is only oneway; A can sell tickets on B, but B can’t sell tickets on A.The pedant in me suggests using “(and usually vice versa)” for the first bullet point.

    “An interline agreement allows three basic types of cooperation between two airlines.
    * Airline A can sell tickets with Airline B flight segments on them (and vice versa)”

  4. David SF eastbay says:

    When I worked for TWA the last carrier you put someone on under penalty of death was DL. Their prorate agreement was always for the full fare and not face value of the ticket segment or a set fee the airlines contracted for. And i don’t mean a full Y9 you may pay for say 500.00, but a full Y no one pays that you would only see in an airline or travel agent computer for 3000.00 or whatever it was.
    We could also reprotect on WN and do self ticketing on WN for our own employee travel, but not issue tickets for passenger travel.

  5. JoEllen says:

    I guess DL got a ton of complaints from their elites who didn’t want to be accommodated on other (than AA) airlines if they could be re-accomodated on AA non stops. Did they let their employees know?…because it seems whenever an airline starts a negative trend and then reverse it, the front-line employees never seem to know about it. This goes for AA employees as well,….have they now been told it’s okay to honor DL tickets ?

    • CF says:

      JoEllen – This has been pushed out to employees on both sides through internal memos. I’m not sure how much else has been done to reinforce that, but I imagine that when things get really bad, there’s an internal group coordinating anyway.

      • Tim Dunn says:

        Delta and several other airlines automatically rebook passengers that are at risk of misconnecting or are on cancelled flights and that capability includes booking on other airlines. While individual airport agents will have to rebook some passengers personally, a lot of rebooking these days for most airlines is done by reservations or via automated systems, including airline websites.

  6. renatos says:

    Great Piece!

  7. DesertGhost says:

    Nice to see a return to common sense.

  8. Troy says:

    What is the reverse of the expression “eat crow”?
    A few years ago I was consulting with an unnamed airline…let’s call them ‘Blue’. Blue’s chief executive used to work for ‘Red’, but got passed up for the top job while at Red, making him very sad. Soon after, he went to work for Blue and his sadness turned to bitterness. The CEOs at Blue and Red were certainly not friends at this stage. In fact, Blue’s entire culture was established at taking aim at Red and with an aggressive competitive style. Meanwhile, Red pretty much took it in stride, being the dominant player in the market. At Blue, this anti-Red dogma carried through to re-accommodation of passengers. Blue and Red ceased all official agreements with each other, including interline ticketing, baggage and re-accommodation. This inevitably impacted customers at both Blue and Red and all for the bruised ego of an executive who was slighted. If Blue had a cancellation, customers would have to wait for the next Blue service, sometimes for many hours or even overnight. So, while the CEOs were mired in their distaste for one another, their customers were paying the price.
    When I came in to consult for Blue and learned of this situation, I implored them to carefully consider a bi-lateral agreement to at least re-accommodate and accept each other’s customers during disruptions only. This was met with what can only be described as stonewalling. Emails unanswered, questions left dangling, etc. The “consulting” part of my job was in vain because they flatly rejected any suggestion which involved inking an agreement. All of this was at the travelling customer’s expense, both for Blue’s and Red’s customers. However (and that’s a BIG ‘HOWEVER’), Blue still needed Red in difficult times. Likewise, on occasion, Red needed Blue. So, at the airport level, Blue would still re-accommodate passengers to Red under the radar. In practical terms, this meant that Blue would pay for customer’s new tickets on Red during times of extreme need. The process was messy though; it was a combination of local gentlemen’s agreements on rates and baggage acceptance along with back office invoicing and settlement. It was ugly, to say the least.
    Blue finally capitulated and confessed to my company and me that it needed a more streamlined, technical solution to re-accommodate to Red, but there was no way in hell that they would ever engage in an interline agreement of any official nature. It would have to be the current ugly process with bits of technology plugged in to facilitate post departure accounting. So, as an I.T. provider and a solution-oriented organization, we developed that hybrid tech and manual process for Blue. It certainly wasn’t free for us to develop and it took a serious effort on behalf of Blue to implement at all its airport stations, but it eventually happened after more than 2 years of work.
    Fast forward a few years…I’m now well removed from the situation. I’m a customer flying on Red. My flight is late, meaning I won’t make my connection. I arrive at the connecting city and to my shock, find out that Red has rebooked me to Blue. Of course, having been part of this process in the past, I was intrigued. Had they used a process that we developed? Had they modified it further to be less hybrid and clunky? To my utter amazement, I discovered that Red and Blue finally had come to the table at some point and created an official interline agreement to accommodate each other’s disrupted passengers. Egos be damned, the customer wins and the process is restored to its streamlined legacy.
    Moral of the story and a message to airline executives; don’t sacrifice your customer’s experience, the airport staff’s ease of rebooking and accounting’s revenue recognition for your own short-sightedness and big ego.

  9. Brent says:

    Yes – only 2 years to get back half a loaf! This is one area a government regulation could make a huge difference: mandate that carriers have this kind of agreement for IROPS. Yes – JetBlue, Southwest…everyone. And with E ticketing, no one can claim it can’t be technically done.

    But that points to another devil-in-the-details: airline procedure [leftover from decades ago when theri computers weren’t speaking to each other in real time] mandate that they CALL the other airline to make the booking. Which also then increases the chances of error [mismatched names/flights etc] so that the E ticket doesn’t transfer. CRAZY! And yet airlines tell their agents they can only stay on hold for OA a max of X minutes [like 10] – and guess what…if there are IROPS how long do you think it will take? And in the meantime, whatever seats were available disappear.

    This is yet another example of how airlines are notorious for squeezing pennies and yet blowing Million$ on ridiculous IT failures etc. They hate agencies – and have minimal staff – and yet when they have a problem “call your travel agent.” Yet if agencies aren’t empowered to make the changes in their computers to assist passengers, this will just bottleneck with far fewer good outcomes than should be.

    • Tim Dunn says:

      As much as some people want to legislate customer service, deregulation of the US domestic airline industry allowed airlines to do what they thought was in their best interest. LUV decided to go it alone and has built its entire business model on not working with other airlines. I’m not sure why some people get so worked up about AA and DL deciding to cancel their ticketing agreement even if is now reinstated.

      For two years, customers knew (if they asked or even knew to ask) that AA and DL would not rebook each other’s passengers. Ironically, AA and DL both grew dramatically over the 2 1/2 years that they didn’t work with each other in passenger rebooking. But it is also worth noting that DL’s market share in both LAX and NYC grew relative to AA during that time period.

      No, I don’t want WN to be forced to work w/ other airlines if they don’t want to. If AA and DL can figure out how to work together, great. If not, there are options, including the ticketing counter direct rebooking.

      AA and DL will both be fine whether they send each others’ passengers to each other or not.

    • CF says:

      Ptsbeyond – Actually, American specifically said in the communication I saw that no calling is required for this one. So that’s good news.

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