Airline partnerships have been around for quite some time, with the first codeshare agreement having been created in the United States as early as the 1960s.
Today, many airlines still maintain partnerships with each other, be it in the form of bilateral arrangements or by joining an alliance. The technology that has enabled these partnerships, however, hasn’t changed much over the last few decades.
Each new collaboration between two carriers requires considerable investment and adds an extra layer of complexity to an airline’s existing operation. It is, therefore, not surprising that smaller airlines and low-cost carriers have generally stayed away from building such partnerships.
While partnerships continue to play an essential role in the global aviation industry, what has changed is the way that airlines go about them. While these partnerships used to be considered strategic, they are now approached in a more tactical manner. When Cathay Pacific joined the OneWorld alliance in 1999, it was a strategic move, guided by intangible considerations such as competitiveness, reputation, and network synergies.
When Cathay Pacific started to virtually interline with easyJet in 2019, it was a tactical move, guided by tangible considerations such as revenues, schedules, and distribution.
China Southern has recently exited the Skyteam alliance, which suggests it has given up entirely on the alleged strategic benefits of airline alliances and is instead focusing on the tangible benefits of tactical bilateral partnerships.
While the current Interline landscape is clear, the bigger question is, where is airline distribution heading? Here are some of the main trends that we see happening in the coming years.
Technology innovation is taking a leading role
A new generation of airline reservation systems is doing away with outdated processes like ticketing and instead focuses more on direct distribution and digital retailing. In this new environment of standardized XMLs and open APIs, airline partnerships are still going strong and are gaining importance.
This is mainly because costs and complexities have significantly come down, and as a result combining two different airlines in a single booking is no longer rocket science.
In the same way, you can buy 1984 by George Orwell and Fifty Shades of Grey by E.L. James in a single transaction on amazon.com; you can now buy an Amsterdam-London flight by easyJet combined with a London-Dubai flight by Emirates, in a single transaction on Easyjet.com.
The underlying technology ensures that the itinerary is viable in terms of minimum connecting time and will highlight any difference in service level, such as variations in free baggage allowance.
What does the future look like? Due to restrictions on cross-border mergers among airlines, there will never be a truly global airline that can cover the entire planet. No airline will ever be able to get someone from Akureyri in Iceland to Tahiti in French Polynesia on its own network.
Hence the continued need for partnerships among airlines and innovative technology. And this need will only intensify. As the middle class in Asia, Africa, and South America grow, global traffic flows will become much more fragmented, and airlines need to forge new partnerships in all corners of the world to be able to satisfy this diverse demand.
If someone wants to fly from London to New York, he won’t have a problem finding decent flight options. However, how does one get from Akureyri to Tahiti? Or from Vladivostok to Seychelles? On any given day, there are thousands of possible itineraries to get someone from point A to point B with most of the options involving two or more airlines.
So to ensure the highest number of potential connections, and therefore to get the most efficient itinerary, each airline’s flights must be made combinable with those of any other airline. The current interline technology would be helplessly overwhelmed to make this a reality. But emerging technologies like Interline 2.0 spearheaded by companies like Dohop, are already working to make this a reality.
Such smart technology not only enables passengers to get the highest number of route options, but also enables airlines of any kind to partner with any other carrier independent of their operational model, be it low cost or full service.
Airlines can take advantage of this new and smart way of working together, without the need for lengthy negotiations and system compatibility issues, while passengers can take advantage of a unique booking experience that in many ways is superior to the one offered in a traditional interline setup.
Digital solutions such as Dohop’s Interline 2.0 offer customers a straightforward booking experience with a transparent and clear structure. Passengers know exactly what they are paying for and have the ability to personalize their experience with a full suite of ancillary offering that only this technology supports.
In a traditional interline setup, passengers will generally struggle to customize each leg of their journey in the same way they can with Interline 2.0.
The opportunities for a personalized journey with a wide choice of ancillaries such as seat selection for both carriers, meals, bags, premium class options, and more are definitely a step closer to offering the customizable retailing experience consumers of today are getting more and more accustomed to.
As Interline 2.0 empowers the customer, does this mean that power is shifting away from airlines? Not necessarily. Interline 2.0 is a technology that can create a win-win situation for all parties involved.
On the one hand, customers are able to choose from a wider range of connecting options and are able to personalize their tips according to their individual preferences. Airlines, on the other hand, are able to offer a wider range of destinations, pick up passengers from countries that they don’t serve and are able to increase the revenue they make from ancillary services.
As a result, Interline 2.0 improves the situation over traditional interline for both buyer and seller and there should be little resistance, except for the vested interests of some existing technology providers.
Embracing multimodal transport for a greener future
As the world becomes more aware of the strain of its own consumption on the planet, airlines are being brought into the conversation whether they welcome it or not.
While there have been several initiatives started by airlines towards making air travel greener, mostly through carbon offset programs, the younger generations are directing their attention towards alternatives.
A rise in the “experience economy” where people increasingly spend their money on experiences such as leisure trips, combined with conscious behavior, is bound to lead to a growth in rail travel. Airlines can either ignore this change or get in on the action.
New technologies allow airlines to do so by adding ground transport to their connecting itineraries. And with rail transport being responsible for 76% less CO2 than road transport, it is the best bet for clean transportation. Virtual interline is slowly becoming the norm as large LCCs such as easyJet in Europe, Jetstar in Asia, and many others are launching their own solutions.
Now, these airlines have the option to expand their network not only through partnerships with other airlines but also combine their flights with road and rail transport to provide efficient itineraries to their audience. Itineraries combining flights and rail transport can offer an alternative to an otherwise unavailable itinerary or one that would be more time consuming or costly.
This will not only allow airlines to address the new change in mindset around sustainable travel but be at the forefront of it.
Interline plug and play
As more airlines understand the technological innovation that Interline is benefitting from, and the advantages that come with it, it’s only natural that the number of airlines interested in taking part will increase in the near future. Right now, it’s mostly those at the forefront of innovation that take advantage of the new virtual interlining offering.
But once those bravest airlines prove the concept and show their success, a lot more airlines will want to take part, whether it will be by building their own platform or being sold as part of connections on another airlines’ platform.
Currently, virtual interline is already a much faster and straightforward process than traditional interline will probably ever be.
Still, airlines need to reach out to each other, agree on terms, align bundles and ancillaries and other considerations.
So, once virtual interline becomes the norm, companies such as Dohop, the market leader for digital interline solutions, will have to step up and enable airline connections at the push of a button in an effort to address the increasing interest and cater to a large volume of airlines.
What would this imply? There is obviously a learning curve with any new technology.
A company such as Dohop, which has been at it since 2015 and has a tremendous amount of experience in all aspects of project management, would be able to orchestrate such automation.
Even though every airline may be unique in its booking flow, payment processes and most other things, experience in managing airline integrations is the key to success.