Imperative Of Interline, Codeshare For Profitability

Airline owners and stakeholders have realised that interlining/ code sharing could be profitable as airlines, in most parts of the world, are seeing cooperation as the way to go in order to remain relevant in the highly dynamic aviation industry. They have identified what consumers want and the challenges consumers face, which form the imperative for interlining and codeshare, writes WOLE SHADARE

 

Nigerian airlines no longer beautiful brides

It was not as if the disclosure by the International Air Transport Association (IATA) representative in West Africa, Dr. Samson Fatokun, that Nigerian airlines are and no longer the beautiful brides when it comes to partnering with international airlines is anything new.

He was only re-emphasing the level the carriers have sunk in nearly 20 years that it becomes so difficult to even touch them with a long spoon.

Fatokun was very emotional when he spoke with statistics at the recently held quarterly Aviation Round Table (ART) Breakfast meeting held virtually with theme, “Utilising Interlining and Codeshare Agreements as Tools for Domestic Airlines Profitability and Passenger Comfort,” lamenting that the carriers were no longer “The beautiful bride of European, American and Asian carriers.”

Nigerian airlines are local champions and not playing in the big league. They are not showing seriousness. The world is a global village; Nigerian airlines do not have attractive network.

 

Ibom Air, Dana set to make history

While Air France interlined with defunct Bellview and Aero two decades ago, domestic airlines have shied away from it, as a result of many bottlenecks and challenges associated with the set up that experts believe are surmountable.

Air France at the peak of Aero Contractors’ operations had a good partnership where all its passengers from all over the world connected domestic flights with the Nigerian carrier to any route in the country it operated to. The two airlines sold each other’s tickets through an arrangement that benefitted both parties.

The French national carrier before then also had the same arrangement with defunct Bellview Airlines and it was an instant success.

The inability to replicate that success among Nigerian airlines on the domestic market was what naysayers said could not work partly because of the desire by airlines to want to go it alone or the fact that many of the carriers are set up not to last but a vehicle for other ulterior motives.

Ibom Air and Dana Air, two airlines that have done so well for themselves by Nigeria’s aviation standard have concluded plans to enter into business deals in the form of interline/ codeshare which could be a masterstroke for resolving incessant flight delays their passengers are subjected to.

That could lead to the formation of the first domestic airline merger in Nigeria and by extension give impetus to reshaping and redirecting the airline industry that is riddled with poor services and other associated vices.

For many years, the idea of bringing airlines together to save airlines so much pain as a result of flight delay and cancellations that is becoming the norm now in Nigerian aviation industry had ended as a talk show with no visible plan of actualising it.

 

 

Uriesi unfolds plans

Chief Executive Officer of Ibom Air, George Uriesi, disclosed the extent to which his airline had gone to bring the innovation to fruition.

He stated that his carrier last week held a crucial meeting with the determination of interlining with some Nigerian airlines, adding, “We are going to launch soon by May, 2021.”

He described the country’s airline industry as competitive because of proliferation of airlines for a small pool of market, which comes with lots of empty seats when aircraft doors are closed.

His words: “We are on the last phase of the interline project. By May, we shall launch. The challenge of it is to have partners who are organised and who meet up with the organisation of your company. Your workforce has to work together, seat together to  look at your schedule, integrate into your reservation system.”

The new partnership is premised on the fact that the airline seat is a highly perishable product. The domestic business environment is highly competitive with multiple airlines chasing relatively small market in a depressed market occasioned by COVID-19.

Delivering four unique services

A case study on “Classic Airlines: Practical Marketing Solution”, published in The Journal of Business Studies Quarterly finds that to ensure passenger comfort, airline must deliver on four unique elements of services such as intangibility, inconsistency, inseparability and inventory.

Services can’t be held, touched or seen before the purchase decision. So, when a passenger steps onto an airplane, they expect certain qualities like comfort, a smooth flight and prompt service from flight attendants.

These qualities, while important to flyers, are typically impossible to gauge until after purchasing a plane ticket. All airline operations are done with a focus on profitability.

Therefore, it is expected that interlining and codeshare will provide greater opportunities for airlines to be profitable, just as airlines can offer destinations not served by their own aircraft, expanding destinations without flying there without adding new routes.

With this, passengers have greater options than with a single airline. A passenger can book travel from point A to C through point B under one carrier’s code, instead of a customer booking from point A to B under one code and from A to B under one code, and from point B to C under another code.

This also creates a perceived service to non-service airline and a good method for carriers who do not operate their own aircraft on a given route to gain exposure on the routes they have never operated before.

Interlining limitations

IATA offers a global platform for airline interlining even though former Director- General of Nigerian Civil Aviation Authority (NCAA), Dr. Harold Demuren, called for the creation of domestic clearing house for airlines willing to go into airline partnership.

The limitations of interlining according to IATA is that the airline must be a member of the IATA clearing house and be required to make a deposit, a security charge and pay monthly recurring charges. There are other costs such as GDS distribution fees, IATA agency commissions and volume incentives to key partners to ensure market share.

 

Fatokun, however, stated that: “If we eliminate the IATA option and consider domestic arrangements or bilateral arrangements, then, there are the issues and views that agreements are entered into by parties that consider the counter party and as equals.”

While the challenges of domestic interlining agreement had been highlighted, the idea has its numerous advantages in the sense that it gives greater scope to airlines in the number of origins/destinations that they can offer to their customers, including markets shares where they are prevented from operating to due to bilateral air services agreements and foreign ownership restrictions.

It offers additional sources of passengers, access new customers, ability to operate at higher capacity utilisation and therefore at lower average total cost per seat.

For consumers, it gives greater convenience and lower cost for connections with a choice of airlines and schedules that suit their requirements and the ability to change flights, routing and to add or delete stopping points. It is magical how a single ticket and a single contract can guarantee connection.

Last line

It had been proven that interlining/codeshare would help airlines to maximise profit and make air travel to be enjoyable for passengers and on the other hand eliminate delay and flight cancellations

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