Codeshare Management: Obstacles to getting it right!
18. Feb 2016
You read in the news nearly every day that airlines agree on closer co-operation and announce new codeshares on certain routes and markets. Codeshare agreements are used to virtually extend your own operational network by adding new destinations. By connecting to your partner’s network and markets you will attract more of your partner’s passengers to your own flights. It is an easy way to grow, or maintain the status quo, without increasing your operational costs.
Unfortunately, codeshare management can be extremely complex, especially if you have a large amount of codeshare partners or partners with complex networks. The result is visible if you check the schedule synchronicity of partners frequently; the operating flight does not fit to the marketing flight and vice versa; thereby leaving flights out of sync, which leads directly to significant manual interaction and rejected bookings, or failures in the inventory systems. Incorrect or incomplete schedules impact all areas of an airline because “the schedule is the backbone of an airline”. Nearly every task is based on schedule data: from scheduling, operational control, over inventory, revenue management and accounting, ground handling, and fuel calculation, to name a few. Faulty schedule data leads directly or indirectly to preventable problems and manual interactions.
Where are the typical stumbling blocks in codeshare management in your day-to-day business? We identified six main obstacles:
Based on the results of market analysis, a codeshare agreement is usually made between the alliance departments of two airlines. Well, codeshare agreements are designed from easy, on one end of the scale, to highly complex on the other and the rules are quite quickly decided and agreed upon in writing between the partners. But what about setup and maintenance of the agreement in your daily work? Here you can see that airlines reach their limits. They often don’t have the capability to setup the complex rule sets and to accurately consider these in the schedules required by the alliance department. Many airlines are managing the implementation as best they can considering their available capabilities, but not sufficiently well according to the closed and existing agreement.
Very often, partners work on the basis of different pre-conditions. Where one partner has established a tool and a specific process, the counterpart in the agreement does not work in the same way. It is similar to a tandem bike, but only one of the drivers has pedals. Within Star Alliance for example, all members are instructed to follow a general principle: “The operating partner is in the lead by adding the DEI010 according to the codeshare agreement that the marketing partner has to follow.” This principle is indeed regarded as the best practice method based on a simple fact: the (re-)action of the inventory systems in case of asynchronism between operating and marketing carrier. The concept always leads to the situation that the operating carrier’s flight is updated before the marketing carrier’s flight, which avoids manual intervention in the inventory system. Even in other alliances like Oneworld and SkyTeam, as well as codeshare agreements with or between unaligned airlines, this principle is quite common, although the regulations are not as strict as they are in Star Alliance. There are often different processes established that exceed the capabilities of the airline in terms of tools, knowledge and/or human resources.
Even if the codeshare agreement and process are available, airlines have to establish a timely and highly frequent schedule of data exchange with their partners. Airlines usually optimize their own operational network day by day and they concentrate getting the ideal usage from their own fleet. Sadly, they frequently fail to check the corresponding marketing flights of their partners. Even a simple time change of five minutes might break connectivity at the connection airport or the changed equipment type is not allowed to be used in the codeshare agreement. The more intensive your codeshare agreement, the more frequently you need to exchange schedule data in a readable format. Based on my experience, some airlines are exchanging schedule data just once a week. In the last few days prior to operation, it is especially important to have synchronized codeshare schedules, but such a data exchange, being a pre-requisite, is quite rare or accomplished manually e.g. via e-mail or phone. This is surely insufficient in order to have acceptable and high quality results at the end.
As already mentioned, airlines are mainly concentrated on optimizing the rotation of the own fleet, especially if the airline has a large fleet to manage and the volume of schedule changes per day is quite high. This is understandable, as this is the main pillar in their own business. Hence, the risk to break a codeshare connection or to violate a codeshare agreement is quite high. All the schedule changes of your own network have to be considered in the dynamic interaction with the amount of schedule changes of your codeshare partners on a daily basis. For example, United Airlines, a major network carrier, optimizes its own schedule once a month resulting in around two million schedule changes. Codeshare partners of United are fighting a flood of information to find the flights relevant for their codeshare agreement. It is a mass of data you can’t control manually or with a missing process.
Having a view on the schedule data flow within an airline, you usually find a scheduling tool where “the schedule is born” and aircraft rotation optimized. In addition, an operational control tool manages your own flights in the last days before operation and the inventory system receives the schedule data from the scheduling and operational control tool. Codeshare management is usually done as secondary field of activity, in either the scheduling tool or inventory system, and as mainly a manual action frequently combined with Excel sheets. At many airlines, codeshare management is a highly manual process. Just a few airlines have recognized that there is huge commercial potential in codeshare management; they decided to separate the process and manage it with a team and separate system – a good decision.
Codeshare agreements range from very simple to exceedingly complex. The easy codeshare agreement is the direct, trunk, or neighborhood codeshare. In this agreement, the partner airlines just assign the codes among each other between any two airports. The real complexity comes with codeshare agreements where airports are used to connect the operational network of the two partners. In addition, limitations such as Minimum Connecting Time and parameters like authorized equipment, allowed subsidiaries and limited number of assigned codeshares per week or market, complicate the handling and the management of the agreement in the daily work. There is a mass of limits and parameters available which aggravates the daily routine. In addition, the used reference data like the already mentioned Minimum Connecting Time or Daylight Saving Time within the processes of both partners shall be always up-to-date, complete and in best case equal to build the base to get same results at the end. Even this is sadly very often not available.
In conclusion you can say, in most cases, that problems in the codeshare management area are based on a combination of problems as outlined above. Codeshare Management is complex, but you can generate a lot of additional revenue, if you do it right.
Additional informations in our press-releases: "Lufthansa Systems teams with United Airlines to manage codeshare connections"
Related blog articles:
Codeshare synchronicity within the major alliances
Best practice in Codeshare Management