Codeshare Agreements as a Competitiveness Strategy in Commercial Aviation

Perhaps some of us have experienced this: after purchasing a ticket online with one airline, upon arriving at the airport our flight number does not appear on the screens. Instead, a different flight number from another airline shows up — but with the same destination city and departure time as our flight.

This situation can be somewhat confusing, and we might think it is an error or that we have missed our flight. However, the truth is that it is not a mistake: these are codeshare agreements. What are they? What benefits do they generate? What is the responsibility of the airlines that participate in these agreements? These are some of the questions we will answer below.

What are codeshare agreements?

They are commercial agreements (contracts) between two airlines, in which one of them (the marketing carrier) sells tickets under its own flight code, while the other (the operating carrier) transports the passengers who purchased the ticket under the marketing carrier’s code. One airline operates the flight (with its aircraft and crew), and the other sells tickets for that flight.

What benefits do they generate?

Since the 1980s, these agreements have become a cooperation channel that creates a competitive advantage for those who participate in them, offering consumers a wider range of routes. They represent the perfect opportunity for airlines to virtually expand their own operational networks and sell flights to any part of the world without having to operate them directly.

What is the responsibility of the airlines that participate in these agreements?

According to section 5.160 of the Colombian Aeronautical Regulations, agreements between airlines that involve service collaboration to, from, or within points in Colombia require approval from the Colombian aviation authority in order to be executed.

One of the approval requirements is that the agreement must include stipulations establishing joint liability, both for the marketing carrier and the operating carrier, for any damages or harm caused to passengers, cargo, or third parties during the execution of transportation under the agreement.

Thus, considering the various restrictions some airlines face when operating certain national or international routes, as well as the market entry difficulties in specific countries, it will remain common for more airlines to enter into codeshare agreements as part of their commercial strategy.

Written by: Guillermo León Arevalo