What do airlines charge each other?
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What do airlines charge each other?
A question springing from the "Operational Reasons" thread: when an airline, for whatever reason, books you onto another airline to complete your trip, how much do they pay that airline? Does it depend on the initial fare paid, or is there a set "industry rate" for seats in each class? Or does each airline make individual deals with various other airlines?
For example, my mother recently travelled from Sydney to Geneva in business class on Etihad. The aircraft went seriously tech before boarding in Sydney. Etihad booked her on Thai, SYD-BKK-FRA-GVA, and got her here only a couple of hours later than her original scheduled arrival time. Pretty slick work on Etihad's part - but what would they have paid Thai?
For example, my mother recently travelled from Sydney to Geneva in business class on Etihad. The aircraft went seriously tech before boarding in Sydney. Etihad booked her on Thai, SYD-BKK-FRA-GVA, and got her here only a couple of hours later than her original scheduled arrival time. Pretty slick work on Etihad's part - but what would they have paid Thai?
Lady Lexxington
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Well it depends on the airlines in question and the working relationships they might have with each other. Some carriers might say only rebooked in the most expensive class for each cabin, whereas another might say just use whatever is showing in the system. It's not a cut and dried process at all.
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This is actually a very complicated subject and one which people do not think about. When a flight is cancelled the ground staff are working under very stressful conditions , so most airlines have pre agreed arrangements to accept each others tickets, and the revenue is eventually (can take months) transferred through the IATA clearing house.
The actual amount depends on whether the ticket is endorsed at face value (usually no change in routing or additional sectors) which means the receiving airline get the value of the coupon ,the ticket can also be involuntary re-routed (similar to above however some arilines have pre-set agreements on sector value). A flight interuption manifest can also be issued which allows the receiving airline to initially claim the full fare this can then be adjusted to reflect the actual fare paid but can again take months to sort out. Basically it is an expensive business when a flight is cancelled.
The actual amount depends on whether the ticket is endorsed at face value (usually no change in routing or additional sectors) which means the receiving airline get the value of the coupon ,the ticket can also be involuntary re-routed (similar to above however some arilines have pre-set agreements on sector value). A flight interuption manifest can also be issued which allows the receiving airline to initially claim the full fare this can then be adjusted to reflect the actual fare paid but can again take months to sort out. Basically it is an expensive business when a flight is cancelled.
many years ago we had a local arangement between ezy and ba. that if each others flight was canx we would take as many as we could of each others pax for flat fare of 50gbp. all sorted out with a mato. only 2 airlines going south then. got stoped after a while cant remeber who by or who but at the time it was great for all the staff on the ground
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Just to add to frontcheck's excellent explanation of this topic, an explanation of 'the value of the coupon'. It's done by prorating and very roughly works as follows :
Journey is LON - BA - BKK - QF - SYD - QF - BKK - BA- LON
Assume ticket price (base fare) paid by pax for the round trip is NUC 1000 (NUC is Neutral Units of Calculation, a fictitious currency equivalent to USD used in fare calculations) for the round trip.
If you did this journey by purchasing 4 one way tickets rather than a through ticket, which would be like building a car from spare parts and would result in a much higher price, it would have cost NUC/USD 2600, as follows :
LON - BKK o/w is 700
BKK - SYD o/w is 600
and same for return journey, so total of all sectors = NUC 2600
Prorate value of LON BKK coupon is 700 x 1000/2600 = NUC 269.23
and of BKK - SYD 600 x 1000/2600 = NUC 230.77
Journey is LON - BA - BKK - QF - SYD - QF - BKK - BA- LON
Assume ticket price (base fare) paid by pax for the round trip is NUC 1000 (NUC is Neutral Units of Calculation, a fictitious currency equivalent to USD used in fare calculations) for the round trip.
If you did this journey by purchasing 4 one way tickets rather than a through ticket, which would be like building a car from spare parts and would result in a much higher price, it would have cost NUC/USD 2600, as follows :
LON - BKK o/w is 700
BKK - SYD o/w is 600
and same for return journey, so total of all sectors = NUC 2600
Prorate value of LON BKK coupon is 700 x 1000/2600 = NUC 269.23
and of BKK - SYD 600 x 1000/2600 = NUC 230.77
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Well, that was true ...
Capetonian,
What you describe "straight-rate prorate' was the way that it was done for many years, but about 15 years ago they changed it to a weighted mileage system. Basically the amount to be prorated (always done on OW or 1/2 RT NOT on the RT fare) is shared in proportion to the distance travelled. But ... since short haul sectors are more costly to operate, and as some regions are more expensive to operate than others the actual miles used are weighted.
There is something called 'provisos and requirements' which I'll stay away from because it is just another complication and, except for full fares, are usually ignored anyway.
What you describe "straight-rate prorate' was the way that it was done for many years, but about 15 years ago they changed it to a weighted mileage system. Basically the amount to be prorated (always done on OW or 1/2 RT NOT on the RT fare) is shared in proportion to the distance travelled. But ... since short haul sectors are more costly to operate, and as some regions are more expensive to operate than others the actual miles used are weighted.
There is something called 'provisos and requirements' which I'll stay away from because it is just another complication and, except for full fares, are usually ignored anyway.
Last edited by ExXB; 15th Aug 2009 at 14:05. Reason: typo
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Yes, ExXB, I know that but I though it better to stay away from the complication of weighted mileage, and also the 1/2RT or OW issue, because most people look at the round trip fare, but you are absolutely correct and thanks for pointing it out.
