New Telegraph

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 sick and no longer the beautiful bride 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.”

 

His words: “Nigerian carriers need to join or partner with international airlines including strong African airlines like Ethiopian Airlines, Egypt Air and other reputable carriers in the region.

 

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.

 

They are no longer to be reckoned with. They provide poor services, have no quality products.” Opportunities lost Fatokun noted that the carriers should start seeing opportunities, regretting top management of the airlines hardl  attend summits where aviation decisions are taken and which have great impact on their operations. “You can’t run a successful airline that way.

 

There must be legal framework to guarantee confidence and safety. They must be strategic, seek cooperation. Nigerian carriers enter into alliances and cooperation when they are about to die. At that point, nobody takes them seriously. “Training is required.

 

You must train your people to generate revenue. They need personnel to negotiate commercial agreements in your favour,” he said. 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 to any route in Nigeria where the Nigerian airlines operated to. The two airlines sold each other’s tickets through an arrangement that benefitted both parties.

 

The carrier before then also did same arrangement with defunct Bellview Airlines and it was an instant success.

 

But 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 motive.

 

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

 

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

 

For many years, the idea of bringing airlines to partner to save airlines so much pain as a result of flight delays 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 at which his airline had gone to bring the innovation to fruition.

 

He stated that his carrier just finished a long process 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 guage 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 arrangement, then, there are the issues and views that agreements are entered into by parties that considers the counter party and as equals.”

 

While the challenges of domestic interlining agreement had been highlighted, the idea has its numerous advantageges 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

 

 

Read Previous

Ethiopian offers national airline assistance to Nigeria

Read Next

I am Isa Funtua, I assure you, I’m dead!

Leave a Reply

Your email address will not be published. Required fields are marked *