This article is written by Sidharth Trehan pursuing a Diploma in Advanced Contract Drafting, Negotiation, and Dispute Resolution from Lawsikho.
Table of Contents
The chronicle of Kingfisher Airline
Kingfisher Airlines was owned by the United Breweries group also known as the (UB) group. It was established in 2003 but took its first flight in 2005 as there was a delay in the licenses by the DGCA (The Directorate General of Civil Aviation).
The airline in the initial period had a small fleet of A3200, A380 and A320. Kingfisher Airlines made an entry in the Indian market by capturing everyone’s attention by bringing an airline that was affordable and extravagant to each and every class in India. The slogan “Fly the Good Times”, made people try and fly in the Airlines. Kingfisher Airlines was something different in its times, giving a service that was not given by any of its competitors in the market.
It was a whole new experience when a person would enter the cabin of Kingfisher Airlines from warm greetings to take away goodies and appetizing meals in the sky, it was provided with a personal entertainment system for each passenger, which was absolutely new for the economy class. They were not just in an aviation business but were selling a dream and that’s what made them different.
Brief about the Continental Airlines
Continental Airlines originated in the United States, headquartered in Texas, Houston and was founded in 1934. Continental Airlines shared ownership interests and brand partnerships with many other carriers around the globe.
Continental started together as a smaller carrier within the US, therefore known for its deficient operations under the regulated era that provided very fine, almost fancy, service against the larger majors in important point-to-point markets, the most important of which was Chicago(ORD)/Los Angeles (LAX).
What is meant by an interline agreement?
Interline is a broad term used to describe one airline selling an itinerary to a customer that involves services provided by another airline.
An interline agreement is simply considered a commercial agreement between the parties or the airlines. It is incorporated as an agreement when two airlines come together and form up a partnership together, therefore the fundamental nature of this interline agreement is that it allows the passengers to schedule their travel on multiple airlines with absolute less difficulty rather than engaging in booking each one separately. This interline agreement helps in handling the passengers when they are travelling/flying on the same schedule. This allows the travellers/passengers to check their bags to their final destination, once in for all.
Basically, two airlines that have entered into an interline agreement in place, the airlines will handle the check-in and luggage for each passenger. This basically means the commuters/travellers only have to check-in once in for all and their luggage will be transferred from one airline to another, without them having to physically come and collect and even drop it.
This helps the airlines who have entered into this sort of agreement to draw the attention of travellers or commuters by providing easy connectivity to many other destinations which the other airlines don’t provide.
Pros and cons of interline agreement
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Pros of interline agreement |
Cons of interline agreement |
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It provides travellers with many destination options. |
It does not give miles to the frequent fliers. |
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No responsibility to luggage. |
Luggage once submitted, beyond the reach of the passenger till the final destination. |
|
It’s a small partnership between the airlines that fascinates the traveller. |
By entering into the agreement the prices may rise due to lack of competition. |
Codeshare agreement/partnership
After the interline agreement the next step is the codeshare partnership, this basically means more strategic engagement, more collaboration between the airlines under the partnership agreement.
Therefore a codeshare agreement is viewed to be an afterwards process from the interlining agreement, this agreement makes airlines come and work together by placing each of their CODES on each other’s flight ticket or boarding pass. This makes airlines come together and make a strong network even if they don’t operate in those parts of the globe. This Agreement helps the customers or travellers because they get an option to fly with their favourite carriers/airlines and increase their flying miles and get lounge access.
For example;
- One person can purchase a seat on an airline under one aircraft of an airline but it will actually be a seat on the plane of a different airline, which shares the same flight number code.
- The most recent codeshare agreement is between Vistara and Lufthansa. Lufthansa flies to Delhi but has no further link within India. But with this codeshare agreement, passengers can book right through from any of Lufthansa’s destinations to a number of new cities in India which will be taken care of by Vistara.
Difference between interline agreement and codeshare agreement
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Interline agreement |
Codeshare agreement |
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These agreements can be recognised as passenger service agreements for flights between two different airlines. |
A codeshare agreement is like a union between two airlines to increase their networks in various parts of the globe. |
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An interline agreement includes luggage handling, check-in, or even the possibility of rebooking through another airline if one flight is cancelled. |
Codeshare agreement gives the airlines access to more routes without flying to those destinations by themselves. |
“Interline agreement is sort of a friendship, a codeshare agreement is like an engagement, a venture is sort of a marriage, and an alliance is like having a huge family, in which everyone plays their own role.”
The importance of the Kingfisher and Continental agreement
A broad agreement has been engaged among Kingfisher Airlines and Continental Airlines. The engagement of this agreement will benefit the frequent flyers by giving them access to lounges and many other services. This Interline Agreement will be befitting to both the re-updated airlines in their smooth functioning and operation in various regions.
Post-October 2007, the continental airlines launched non-stop flights from New York International Liberty Airport (NYILA) and Chhatrapati Shivaji Maharaj International Airport (CSMIA).
The two Airlines Kingfisher and Continental have come up jointly with an arrangement for their members “Frequent Flyer Program”. In this the Continental Airlines “One Pass” and Kingfisher Airlines “King Club” will be able to redeem and earn mile points on other Airlines, and therefore corresponding airport lounges for the entitled members. This agreement will give the benefit of luggage handling, check-in, or even the possibility of rebooking through another airline if one flight is cancelled.
The agreement between Kingfisher Airlines and Continental Airlines led to the next step which is the “code-sharing agreement” by the end of 2007. By this Continental Airlines will place their CODE (CO) on the flights of Kingfisher Airlines, this will help the airlines to expand their route without flying to those destinations personally. The main objective between Kingfisher Airlines and Continental Airlines is that this will help them to create a strong union/coalition among themselves and the two airlines can increase their network in various parts of the globe.
Critically analyze the importance of kingfisher and continental agreement
This interline agreement between Kingfisher Airlines and Continental Airlines was something that made these companies or airlines form up synergies so that they could benefit everyone from this deal or known as the interlining agreement. This coming up of these two bid re-updated airlines was something very unique for the Indian markets at that time. The synergy created in the industry help their loyal clients/customers/travellers so that they get the best and at a reasonable price.
Therefore this was the vision Mr Mallya had for Kingfisher Airlines, it was rumoured that the venture of Kingfisher Airlines was treated in way of a baby, therefore coming up with Continental at that time help Kingfisher and Continental together reach a new market, the commuters/travellers got services from both the airlines and the flying miles were not missed while travelling by these airlines.
The chairperson Mr Kellner and Mr Mallya have signed the agreement and are happy to announce this engagement, this will help them synergise the relation and stronghold in the market dominance but giving what helps customers/commuters while they travel with their airlines.
The interline agreement is considered as the first step or I may refer it as dating, code sharing may be referred to as a second step which is considered as engagement and the final is entering into a joint venture it is truly something big, live-changing and requires a lot of due diligence is referred to as the final step “marriage”.
Conclusion
As per the understanding of the interlining agreement, the main role of this agreement is to provide comfort and smoothness to the travellers/commuter this makes them take a connecting flight to their destination without any difficulty. This interlining agreement will contain all the information and fare rate which both the airlines will follow and agree upon, this fare will be known as an issue or market rate which will be given by the customer/ commuters to the airlines, later on, the earning will be divided between the airlines under this agreement. If seen in a longer picture there will be an ease for the customers as they will get connected flights, ease of baggage transfer and the most important flying miles for the regular customer.
In relation to the Continental and Kingfisher Airlines deal on interlining, the expansion of them in various parts of the globe, so that their customers get operational flights in many parts and they gain a strong customer base.
References
- https://simpleflying.com/airline-interlining-agreements/#:~:text=In%20 essence%2C%20it%20 allows%20 passengers,baggage%20for%20each%20other’s%20passengers
- https://www.iata.org/
- https://www.cci.gov.in/sites/default/files/JetAirMainOrder180811_0.pdf
- https://www.bizjournals.com/houston/stories/2007/07/02/daily37.html
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