What is Interlining?
Interlining - a commonly used term among the airlines industry. If you’re a frequent traveller, you might have heard the term as well. But what does it mean? How did it come to existence? What do you need to know about interlining?
In this post, we’ll cover everything there is about interlining so that you have a clear understanding of what it means. Without further ado, let’s jump right in.
What is Interlining?
What interlining basically means is that an airline can sell an itinerary to a passenger that is originally offered by other airlines. But why do we need such an arrangement in the first place?
Interlining is like an agreement between the airlines to make the lives easier for the passengers while maximizing profits. Connecting flights and transits are fairly common on international flights. If interlining wasn’t there, the customers had to go through the entire boarding process all over.
While the framework put in place by IATA has been the go-to framework for interlining for as long as we can remember, the dynamics are changing now. The current one in place is a generic model that caters to all the classes.
While it’s a good thing, it creates a lot of problems for airlines as well. Maintaining commercial control has been the primary challenge for years for many airlines. The current framework offers less transparency for the customers and limits the support for related services. All of these ultimately result in limited options for the customers.
Why is Interlining Feasible to Airlines?
The primary reason why carriers go for interlining is customer acquisition. Interlining helps them to reach new customers. It’s very hard for a single airline to serve countries on both ends of a flight. That’s where interlining comes into play. It allows carriers to form a synergy and cover a broader market that would have been otherwise impossible.
Another reason why interlining is very profitable for airlines is the ever-growing network. The more a carrier can serve, the better network it can build in different countries. It results in better market share, both with corporate clients and individual customers. The goal here is to make the brand known to as many people as possible.
One of the main reasons why interlining is feasible is the penetration in different markets. A lot of countries impose restrictions on foreign ownership which can often translate to limited or no access for an airline company. But interlining allows them to penetrate the market by partnering up with a carrier operating in that particular country.
It’s estimated that 8% of the passengers who travel with the IATA member carriers are sold by other airliners. The number might not seem big, but it’s actually significant in terms of profit and market reach. The revenue generated from interlining alone is estimated at 52 billion US dollars every year.
The Old Framework
The initial days of interlining were not so complex. Deregulation was not a thing, and commercial outcomes were not regarded so drastically. At that time, commercial carriers cooperated in regulating international air traffic while charging the same across the board. For that time, this approach worked perfectly fine and was generating decent revenue.
With time, the competition got harder. As a result, the core of the interlining framework was shifted. Now, the objectives of interlining are far more commercial than it ever was. Airlines now have better control over the commercial aspects of the industry. The complexity of the structure has increased, and some other regulations like Codeshare were invented.
Codeshare vs Interlining
Codeshare is basically the intermediate stage of cooperation in the airline business. This is the stage where the airlines further evaluate the benefits of synergy and share their codes. It’s a great way to showcase business with help from fellow competitors.
Most flights have a code so that you can identify it once you are at the airports. These codes are proprietary to the carrier. But the Codeshare agreement allows the carriers to use each other’s codes to mark a flight.
If we look at an example of Codeshare, you’ll be understanding it better. Let’s say a flight is inbound from Australia to New Zealand, with connecting in between. The flight is marked as A2. Now, during transit, the customer will still look for the A2 marker despite the fact that he/she might fly in a different plane from a different carrier.
In interlining, there is no visible branding of the carriers. The entire process is electronically managed to make a seamless experience for the customers. Codeshare includes interlining, but along with the added benefits.
A New Beginning
As IATA is the most prominent authority in regulating interlining clauses, we’re going to focus on IATA. The current framework put in place by IATA has some fundamentals flaws that are being addressed by the framework.
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Customer Transparency
The new framework addressed one of the primary issues that cannot be solved with the current framework, i.e. customer transparency. As customers are the ones paying, they have every right to know exactly what is happening with their purchase. The current interlining doesn’t allow the customers to know that. The entire process is handled in the back end.
But with the new one, the customers will get full information regarding different itineraries that come from different carriers, including low-cost ones. Customers will be able to shop their tickets with a personal touch as they have absolute control over the services. -
Accountability
Accountability has been a major issue in the current framework of interlining imposed by IATA. If something goes wrong, who is to blame? As multiple airline carriers might be involved, taking care of the issues is a challenge. More importantly, the customers don’t know who to contact with their problems.
The confusion is also persistent among airlines. There is no explicit clause that indicates who should take care of the problem. But the new framework will ensure proper accountability if anything is to go wrong. This will also allow airlines to work more efficiently and in harmony. -
Addressing Customer Touchpoints
As each customer is different, it sometimes becomes a challenge for airlines to cater to all their needs. But with the new framework from IATA, the airlines participating in the interlining will have all the information on a customer at all times. There are no data protection regulations to stop the airlines from getting the information they require.
As the customers are getting full control over their purchase, it’s important that the providers know what is happening. The new regulations allow the carriers to stay updated at all times. Airlines can use different channels to communicate, including digital ones or even the airport’s channels.
Some Other Interlining Models
Apart from the one from IATA, there are several other models that are being used by carriers all over the world, especially the economic ones. Such a model would be Worldwide, and it’s imposed by EasyJet. Here, the tickets are sold along with other companies participating, but other aspects of the itinerary like the baggage support are provided by a third party, most commonly the airport operators.
There was a time when members of the IATA members formed partnerships only with other members. But with time as competition is increasing rapidly, existing members of the IATA brands are partnering up with carriers who are not members, even low-cost ones.
Some airlines are even going for retail models where a unique partnership is formed among transport suppliers and non-transport suppliers.
The most impressive one out of the bunch would be the virtual interlining. It’s virtual because there is no solid interlining going on the surface, but it’s happening. In this case, the interlining is managed by specialized travel agents who work online to keep everything aligned. The participant airline companies might not even know about the shared itineraries, but it’s happening.
While the entire process of virtual interlining is supposed to be seamless, it can very well increase the chances of service issues. As everything is controlled by online agents, there might be coordination issues. The new framework from IATA allows virtual interlining but by keeping all parties in the loop. So, the chances of a mishap are reduced dramatically.
Wrapping Up
Interlining has been happening since the birth of the airlines industry. IATA has been the pioneer in guiding carriers to remain in harmony and offer the best service to the customers. But even the best of systems need upgrades at a certain time. Now is that time for IATA interlining framework.
The new modality of interlining from IATA addresses all the issues faced by both the customers and airline carriers like transparency issues, reliability issues, and so on. The new framework is very carefully thought out to benefit all parties.