Airline Codesharing & Special Prorate Agreements
Partnerships with LCCs and FSCs increasing
Over the last few years the market has also seen an increasing movement toward full service and low cost airline cooperation, largely driven by higher yield seeking LCCs adopting more complex IT systems to allow interlining and FSCs seeking security in partners recognizing the increasing importance of LCCs.
In both cases, the issue emerging is that airlines need to be very selective about which airlines to partner with AND need to be more scientific in assessing the quality of the relationship by quantifying real benefits.
Interline and proration are often underestimated
Network planning, pricing and yield management are without a doubt the most important commercial areas of a successful airline. But many carriers underestimate the profit leverage of a good interline and proration policy.
Whether you are in an alliance or not, all airlines need other airlines for feeding and defeeding to and from their network. And this is not only a possibility to receive additional passengers. A lot of airlines pay too much to other airlines through proration and/or receive too little for transporting passengers on another carriers’ ticket stock.
The recipes to optimize revenues on short and medium-long sectors are not secret, but getting them right takes experience. Correctly set the conditions in a prorate agreement can deliver a few percentage points of extra revenue without additional costs. Interline traffic-flows have to be analyzed for optimal settings. Well designed Special Prorate Agreements (SPA) enable an airline to offer additional markets and destinations at competitive fares to the market, enabled by acceptable proration costs.
How we can help
We follow a proven approach to enhance your interline profits by analyzing your current interline and proration strategy. Afterwards our experts develop solutions to help you increase your share of interline revenues, reduce your share of interline costs and improve your competitive position in SPA negotiations.
Unlike generalist firms, AVIADO team members are experts in this highly specialized field. They have extensive depth of experience and unique skills to support you in maximizing interlining and proration position. We are pragmatic and specialize on improving profitability in this complex area through a focus on realistic recommendations.
For more information, please contact Shakeel Adam.
• Analysis of major Special Prorate Agreements (SPA) of a North European airline
• Recommendations to optimize an important SPA for a code-share agreement between a European and a
major US-based global airline
• Concept and inauguration of a database for SPA’s
• Installation of profit-optimized provisos at a major international airline based in Asia
• Initial creation of SPA’s for a start-up airline in the Middle East
• Training workshop for Interlining and Proration at an international airline in South-East Asia