There are different levels of cooperation between airlines. For example, the highest level of cooperation between airlines is a joint venture, whereby airlines share revenue for a given market. Below that you have codeshares, whereby airlines sell tickets on one another’s flights under their own “code.”
And then you also have airlines with interline agreements, which in reality is a pretty low level of cooperation. Basically this allows airlines to:
- Check bags when multiple airlines are involved which don’t otherwise partner
- Rebook passengers on one another in the event of irregular operations
- Handle passengers traveling on itineraries which require multiple airlines
Well, it seems like that was too much cooperation for American and Delta, as they’ll be discontinuing their interline agreement as of Tuesday, September 15, 2015.
American Airlines and Delta Air Lines are ending their interline agreement that allows them to sell tickets on each other’s flights as of Tuesday.
“We have been unable to come to terms on an agreement with Delta and, as a result, have mutually agreed to end our interline agreement effective Sept. 15,” American spokesman Casey Norton said Thursday evening. “From that date, neither airline will offer interline services to each other, including the ability to rebook passengers at discounted rates on the other carrier when flight disruptions occur.”
So what’s the real real for the interline agreement being discontinued? An internal memo sent out to American employees has an explanation:
One tool that we use to help get customers back on their way during irregular operations are the interline agreements we have with various carriers that allow us to reaccommodate passengers on other airlines at a negotiated rate. These agreements also allow airlines to book, sell, ticket, and check baggage on one another. Interline agreements are common across the industry and they generally include a standard, discounted rate for calculating how much is owed by one carrier to another to use their seats during irregular operations.
In April of this year, participating airlines across the industry agreed to new rates for moving customers between carriers during irregular operations. Delta recently decided to go outside of that joint agreement and negotiate an individual agreement with American. We have been unable to come to terms on an agreement with Delta and, as a result, have mutually agreed to end our interline agreement effective September 15. From that date, neither airline will offer interline services to each other, including the ability to rebook passengers at discounted rates on the other carrier when flight disruptions occur. (Note that we will continue to honor valid tickets already purchased on or before September 14 through the existing interline agreement, so there will be no changes there.)
It’s quite interesting that Delta is going outside the joint agreement for irregular operations to try and negotiate an individual agreement with American. My guess is that since Delta is operationally the best legacy carrier, they feel like they’re helping the other airlines too much by carrying their passengers in the event of irregular operations. This comes just days after Delta made a guarantee to their corporate customers that they’ll have better on-time performance than American and United.
Bottom line
Ultimately this isn’t a huge change, especially given how big the networks of the two carriers are. That being said, it’s still disappointing to see airlines unwilling to cooperate even in the event of irregular operations. And this seems to come down to Delta wanting more money for accommodating passengers from other airlines, which I don’t think surprises anyone.
This takes Delta basically into the position of LCC in Europe. While I think all legacy carriers still have interline agreements, the LCC have initially not been allowed in and later refused to join the agreements, because of unfavorable terms in their view.
The impact for the pax is as described, there are fewer alternatives to be rebooked in case of irrops. That can be either irrelavant or very annoying, depending on what are...
This takes Delta basically into the position of LCC in Europe. While I think all legacy carriers still have interline agreements, the LCC have initially not been allowed in and later refused to join the agreements, because of unfavorable terms in their view.
The impact for the pax is as described, there are fewer alternatives to be rebooked in case of irrops. That can be either irrelavant or very annoying, depending on what are the alternatives on the particular route.
It should also be noted that most airlines would first try to accomodate on their own metal, then on JV or codeshare partners, then on other alliance members and other partner airlines and only as the very last resort on competing interline airlines.
Congrats to Oscar Muñoz! One day as UA CEO and already Untied Airlines is best in class in something. For the first time in years, UA can claim to be the best USA carrier in at least one category of service. When IROPS harm their passengers, they'll still have interline agreements with two alternative carriers to relieve the trouble.
For those wondering above, UA already cut new deal with DL. The 5x number of AA - DL v DL - AA during July is very telling. I have a feeling that's closer to the norm rather than the exception. I have a feeling they will work something out before holiday season/winter. Sept - the week before Thanksgiving is a quieter flying period with generally more stable weather.
Yet another consequence of airline consolidation. In a truly diverse and competitive environment carriers would not be able to afford not to be party to these agreements.
I wonder if the lack of a similar announcement about UA/DL (or UA/AA, for that matter, not taking AA at face value over who's to blame for this) means that they *have* come to terms on an interline agreement, or that we are going to be seeing a similar announcement soon regarding UA.
Greg
"Is DL’s gameplan here to cut all domestic partnerships and just out-compete everyone else? While normally a good strategy in most industries, going it alone in this industry seems short-sighted…"
I dunno, seems to work pretty well for Southwest!
"Not sure how you can come to that definitive conclusion"
Lucky wrote "And this SEEMS to come down to..." When someone says "seems," they aren't drawing a definitive conclusion.
You're right that there is an alternative possibility: that American wanted to pay less than what they had been, rather than Delta now wanting to charge more.
I can't blame Delta for this either. AA's performance has dipped while DL's has vastly improved. It seems AA's hubs at ORD and DFW have had some pretty rough weather-related IRROPS the past couple years to boot, which can't help. That said, this of course affects flyers on both airlines. If SLC, DTW, or MSP get hit hard with weather, DL flyers will be stranded or left with UA to help.
Is DL's gameplan here...
I can't blame Delta for this either. AA's performance has dipped while DL's has vastly improved. It seems AA's hubs at ORD and DFW have had some pretty rough weather-related IRROPS the past couple years to boot, which can't help. That said, this of course affects flyers on both airlines. If SLC, DTW, or MSP get hit hard with weather, DL flyers will be stranded or left with UA to help.
Is DL's gameplan here to cut all domestic partnerships and just out-compete everyone else? While normally a good strategy in most industries, going it alone in this industry seems short-sighted...
You say: "And this seems to come down to Delta wanting more money for accommodating passengers from other airlines, which I don’t think surprises anyone." Not sure how you can come to that definitive conclusion. It may be true...but, you are taking a leap.
It looks like Delta gambled and lost. They tried to squeeze AA for a few extra dollars and ended up losing revenue. My prediction is that the two airlines come back to terms in the medium-term.
Delta should reintroduce and update their old slogan: "We love to fly, and it blows..if you're on AA". Can't say I blame Delta, though, as they are operationally so much more efficient. It seems this is AA's doing, not Delta's. Otherwise, Delta would have started with United.
This very well might also have something to do with the Battle for Seattle, and AS reducing cooperation with DL and increasing it with AA. Friend of my enemy......
So what's the impact on passengers? For example, during irregular operations, be it a weather, crew or mechanical reason, my AA flights were delayed/cancelled, then they won't be able to book me on DL's metal on the same route? or would they purchase full fare F/J/Y to accommodate passengers?
As a new Delta flier, this is a bit annoying just from the standpoint of rebooking and also checking bags across the airlines. That being said, I used to be a UA flier and would fly the ORD-DTW weekly. I would say 15-20% of the time I would book UA and they would end up putting me on DL. Now flying DL for a year (still weekly), they have never once needed to put me...
As a new Delta flier, this is a bit annoying just from the standpoint of rebooking and also checking bags across the airlines. That being said, I used to be a UA flier and would fly the ORD-DTW weekly. I would say 15-20% of the time I would book UA and they would end up putting me on DL. Now flying DL for a year (still weekly), they have never once needed to put me on a different airline. I can totally understand why DL is doing this and, frankly, it's probably a better financial decision. Even if they have to pay full price to re-accommodate their elites, they are probably still ahead in the game charging AA (and I assume the same will be happening UA) the same higher price.
Side note: I can't imagine how the conversation will go when an elite on AA is dealing with irrops and there is a DL flight going and AA tells the passenger they won't put them on the flight. If it was Mx, I would be furious.
What's good for the goose is good for the gander. American Airlines has historically been the most inflexible and arrogant of the US legacy carriers with regards to MITA concurrences and SPAs, while Delta was far more flexible. The tables have turned in the last few years, but I don't doubt that this is payback for something someone at AA did years ago. The guys at Delta have long memories.
With only a handful of domestic carriers (and even less who interline) this is a big blow if you have irregular ops, especially when leaving a smaller hub.