Codeshare Agreements: Everything You Need To Know (2024)

The forging of new partnerships and codeshare agreements can be one of the most exciting pieces of news for frequent fliers, opening up new destinations, great deals, and the chance to earn reward points for even more benefits. But how did it start? How - and why - did carriers decide to put competition aside and begin working closer? And why is it such a mainstay in today's aviation landscape?

A short history of codesharing

Turning back the clock to the 1960s. A time of pillbox hats, Beatlemania, Gilligan's Island, and …. codeshare agreements? Allegheny Airlines, the precursor to USAir, became the first carrier to launch a codeshare agreement with a smaller commuter airline in the United States back in 1967. It wasn't until nearly a decade later, following the deregulation of the US domestic aviation industry, that codeshares really took off.

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The official term was coined in 1989 by Qantas and American Airlines as the two carriers looked to offer a hub-and-spoke model service utilizing their bases at Los Angeles International Airport (LAX), Sydney Kingsford Smith Airport (SYD), and Melbourne Airport (MEL). Industry deregulation essentially paved the way for codeshare agreements to soar in popularity. During the 1990s, Europe embraced the new partnership style, and by 2007, the European Commission found all 100 airlines survived in an impact report had at least one codeshare on the books.

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In the years since, several crazy codeshare agreements have popped up, providing unprecedented connectivity worldwide. Recent examples include Etihad Airways and Nordic-based SAS, American Airlines and Aer Lingus, Royal Air Maroc and Air Senegal, and even IndiGo and Turkish Airlines, opening up the US East Coast to India's low-cost market.

How do they work?

Described by Upgraded Points as "a business arrangement in which two or more airlines publish and market the same flight under their own airline designator and flight number as part of their published timetable or schedule," codeshare agreements allow airlines to share their code, simplifying the booking process for passengers and streamlining the travel experience.

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There are three types of codesharing agreements: parallel operation, connecting operation, and unilateral operation.

A parallel operation is when two airlines operate the same route and use each other's codes as their own, sharing the profits and the passengers. Now expired, ex-Italian flag carrier Alitalia and Air France previously operated a parallel agreement on flights between Paris Charles De Gaulle Airport (CDG) and Milan Malpensa Airport (MXP), utilizing both the AF and AZ codes.

A connecting operation is when an airline sells tickets between A and C but only goes to point B. Then, the codeshare partner flies the second leg between B and C. For example, flying between Addis Ababa Bole International Airport (ADD) and São Paulo-Guarulhos International Airport (GRU) with Ethiopian Airlines before connecting onto a GOL Linhas Aereas to your final destination of Brasília–President Juscelino Kubitschek International Airport (BSB).

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Finally, a unilateral operation, or the "behind and beyond route," is when one airline is not involved in the operations in any way, leveraging the other airline's brand, such as that used by LATAM on Vueling services through Europe. This type of agreement is typically utilized for connecting services to smaller destinations on the other airline's network.

Expanding slightly further, interline agreements fall under the codeshare umbrella. Though both partnerships, interline arrangements differ slightly, operating as a formal agreement on flights between two different airlines for things like baggage handling, check-in, and rebooking options to make the customer experience smoother. Examples include airline alliances, such as SkyTeam, Star Alliance, and oneworld, which operate interline agreements between its member carriers.

What about the downsides?

Though popular when expanding networks and partnerships, codeshare agreements have landed some airlines in hot water over limited clarity on some rules and regulations.

In 2023, Virgin Atlantic found itself in hot water for violating Iraqi airspace on flights operated with Delta Air Lines code between 2020 and 2021. Several instances were highlighted by the Federal Aviation Administration (FAA), with Virgin Atlantic breaching flyover restrictions for US airlines on services between the UK and India.

The airline was hit with a $1 million fine by the Department of Transportation (DoT), half of which would be waived if it avoids a repeat of the violation across the next 12 months. Virgin Atlantic owned up to its failures, explaining within the DOT's filing,

"Virgin Atlantic states that it takes seriously its responsibility to comply with all Department regulations and requirements in its operating permits, including the requirement not to operate flights carrying a U.S. carrier’s designator code that enter, depart, or transit the airspace of any area for whose airspace the FAA has issued a flight prohibition for U.S. civil aviation."

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The UAE-based Emirates notably experienced a similar situation with JetBlue, operating several flights over Iranian airspace in July 2019, landing itself a $400,000 fine.

Alongside some political gray areas, other criticisms have included irregular pricing, limited upgrade options, and difficulty for passengers to adjust their plans if their flights are canceled or delayed, with the initially booked airline unable to make any changes to itineraries. Passengers should be provided with clarity and transparency throughout the booking process, allowing them to make an informed decision on whether or not they want to codeshare or examine other options.

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For the frequent flyer, while you may earn miles, codesharing also may present a challenge when accessing premium benefits, such as in-flight perks and flexibility when changing services.

All in all, as the aviation industry expands to reach new destinations, codeshare agreements provide access to new and underserved markets, connect small cities with major hub airports, and generally make the world smaller for everyone.

Codeshare agreements remain a vital part of the industry, particularly during the ongoing recovery from the COVID-19 pandemic. As airline fleets shrink and frequencies dwindle, there is more requirement than ever to maintain global connectivity for business, freight, and commercial travel.

Have you flown on a codeshare flight? What was your experience? Let us know in the comments.

Source: Upgraded Points