Charlotte to Munich, departing June 16, returning June 30. Lowest round-trip fare for a nonstop flight on US Airways, $3,647; lowest nonstop on Lufthansa, $1,427. Maybe a little strange to find such a big spread, but different airlines do charge different fares. But what’s really strange is that those tickets are both for the same actual flight. This sort of situation confused at least one reader:
“A difference of more than two to one for the same flight—what’s going on? And more to the point, if I normally fly US Airways, how do I avoid paying the higher figure?”
The short answer to the first part of the question is simple: Lufthansa and US Airways “codeshare” on that (and many other) flights, and each line is free to set whatever fares it thinks will generate the best financial outcome. As to the second part, you always have to check multiple airlines before you select one that offers the best deal. Here are my answers to some basic questions about code-sharing.
1. What is Codesharing?
When two airlines codeshare, they both assign their own flight numbers to a single flight, which is actually flown by just one of the two lines. In the Charlotte-Munich example, the flight is actually flown by Lufthansa, as flight 429; as a codeshare, US Airways calls it flight 5608.
2. What’s the Advantage in This Process?
Airlines, at least, claim codesharing is good for everybody:
- Codesharing is good for you, they say, because it allows you to book a connecting itinerary on a single ticket, nominally all on one airline, with “seamless” transfers.
- Codesharing is good for themselves, they say, because it allows them to claim they fly to more places, more often, than they really do, and because two airlines can market a single flight more effectively than just one.
But airlines aren’t always eager to be totally open about it. Even though airlines codeshare with “partner” lines, they may not display each others’ flights on their own websites. On the sample trip, for example, the US Airways website does not display the lower-fare Lufthansa option.
3. Why the Big Fare Difference?
On any given codeshared flight, each airline has quotas of seats. Each airline is free to assign as many of its seats as it wishes to various fare “buckets,” and each line is free to price seats in each bucket as it thinks will maximize revenues. Usually, differences within any general fare classification are not great; big differences result from different inventories. On the test trip, for example, US Airways’ seat allocation to its lowest “economy nonrefundable” fare bucket shows “sold out” on its own website, while Lufthansa still has seats left in its lowest fare bucket for the same flights.
Fare differences are often—probably usually—less dramatic. On the same Charlotte-Munich trip, for example, the fare on an identical two-stop itinerary is $1,373 with one connecting flight on KLM and $1,515 on all-Delta ticket.
Even with no fare differences, one line may have more seats available for advance selection than the other. Something to consider if you’re picky.
4. What About Frequent Flyer Miles?
Because most codesharing arrangements are between “partner” airlines, you can usually earn miles in either line’s frequent flyer program. Moreover, these days, miles accrued on either line count toward “elite” status in your preferred program.
Mileage earning, however, may vary. Flights in Lufthansa’s lowest fare buckets typically earn just 25 percent of the actual miles flown, but US Airways awards full mileage regardless of fare. That pattern seems general: Many foreign lines award only partial mileage—in some cases, none at all—on their lowest fares, while airlines based in the US generally award full mileage regardless of fare.
5. What’s the Future of Codesharing?
Codesharing is likely to increase, and to morph into something more over the next few years. As you probably know, many countries—including the US—have laws that prohibit foreign ownership and/or financial control over their airlines. This situation is an outgrowth of the pattern, through most of the 20th Century, when many countries established “flag” airlines, often government owned and controlled, which were actually considered quasi-governmental operations. That the US never embraced the flag airline idea was not for lack of trying by Pan American’s Juan Trippe, but such giant lines as British Airways (then British Overseas Airways Corporation), Air France, and Japan Air Lines were flag lines, and their government sponsors permitted no local competition and assiduously “protected” their markets.
Now that so many air travel markets are deregulated—and aviation is inherently one of the most “global” industries—the consensus among industry leaders and the financial community is that mergers and acquisition into global airline companies would benefit both the industry and consumers. However, anti-merger forces have a lot of political clout, at least in the US, and nobody realistically expects them to happen with US airlines any time soon.
As a result, many of the world’s giant airlines have formed “alliances,” that, in many ways, are mergers in drag. They apply for—and usually get—immunity from antitrust regulations and are able to coordinate capacities, schedules, and fares. Three big alliances currently control much of the world’s air travel:
- Star Alliance, the biggest, includes Adria, Air Canada, Air China, Air New Zealand, ANA, Asiana, Austrian, Blue1, Bmi, Brussels, Continental, Croatia, Egyptair, LOT, Lufthansa, SAS, Shanghai, Singapore, South African, Spanair, Swiss, TAP, Turkish, Thai, United, and US Airways, with Aegean, Air India, and TAM slated to join soon.
- SkyTeam includes Aeroflot, Aeromexico, Air France, Alitalia, China Southern, CSA, Delta, KLM, Korean, Air Europa, and Kenya.
- Oneworld includes American, British, Cathay Pacific, Finnair, Iberia, JAL, LAN, Malev, Mexicana, Qantas, and Royal Jordanian, along with their subsidiaries and affiliates.
In addition to code-sharing, these alliances generally include mutual acceptance of frequent flyer elite status, access to airport lounges, and such.
Currently, the US government is resisting full partnership between American and British unless those lines relinquish enough slots at London’s congested Heathrow airport to provide adequate replacement competition. Most observers seem to think it’s a matter of “when,” not “whether.”
Overall, most of us who follow the industry expect these alliances to devolve into something close to de-facto mergers. Alliance “brands” may well supplant individual line brands as the primary identifiers of air service.
The jury remains out as to whether alliances benefit consumers. Pro-alliance folks talk about “seamless” integration and worldwide connections; doubters worry about decreased competition. Fortunately, even with these alliances, we’ll still have enough independent lines—and especially low-fare lines—to keep a lid on price gouging.
Alliances still haven’t worked out at least one potential problem: differing product and service standards. Within Star Alliance, for example, Continental enjoys a far better reputation for customer service than either United or US Airways, and someone buying a ticket on a “Continental” flight might be very unhappy to see a US Airways plane at the gate. And within SkyTeam, Delta operates its 777s with relatively comfortable nine-across seating, in contrast to the ultra-tight 10-across on Air France and KLM.
Clearly, when you’re checking out a trip, code-sharing poses two challenges:
- Finding the lowest fare for any given itinerary.
- Assuring sufficient frequent flyer earnings.
To get the lowest price, you almost always have to start out by checking your options on one of the giant online travel agencies: Expedia, Orbitz, Orbitz, or an aggregator such as Kayak. Whenever you see two different itineraries, nominally on two different airlines or airline combinations but with identical departure and arrival times and connecting points, you can figure that they involve codesharing. Whether you prefer to buy through one of these agencies or directly from an airline, you need to do the comparison first.
Normally, you’d automatically select the lower price. If the price differential is small, however, you might want to check each line’s frequent flyer earning schedule and available set assignments to make sure you get full mileage benefit.
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