CO, DL, NW Begin Code Sharing

New allies Continental, Delta and Northwest airlines last month took a major step forward in integrating operations when they announced an initial wave of codeshare flights. That development, which will provide to travelers a growing reciprocal network, presents challenges and opportunities for buyers.

On the one hand, the alliance, and a similar, more advanced partnership between United and US Airways, enables the airlines' corporate accounts to tack on services to existing contracts. "It has been favorable so far, and I am optimistic," said Gary Polito, travel manager at Bose in Framingham, Mass., referring to the company's use of combined United-US Airways services.

"Right now, there only is a potential upside, considering airport clubs and frequent flyer programs," added Larry Restiano, director of the customer value program and consulting group for American Express supplier relations. "The scope and breadth available for an account to take a discount on specific city pairs only will get better." However, he cautioned buyers on the longer-term ramifications: "When it returns to a seller's market, the airlines will be able to flex their muscles because of the schedule and the marketshare they will control."

There are some immediate concerns as it relates to scheduling, according to Richard Wooten, director of corporate travel services at Bethesda, Md.-based Lockheed Martin. "Whenever you are flying on the Delta code but the flight actually is on Continental metal, for example, you would not get your Delta discount on the Continental segment. That leads to reduced opportunities overall to apply your corporate discount and increases the overall spending with the airlines," he said. "In the online booking system, the traveler books a Delta flight but does not know it is on Continental. Previously, that Continental-operated flight would not even show up in the system when the traveler was searching for Delta flights."

There are potential remedies, Wooten said, including a block on flight numbers of the codeshare partner that does not offer the corporate discount or a new, three-way contract requested by the travel buyer. "It is something we have to grapple with, and I am not sure what the answer is," he said, referring to both domestic alliances. "The airlines have said the codesharing would be a benefit to the buyer, but right now I can only see it as a detriment to managing our program."

Code sharing between Delta and Northwest began last month on certain Northwest-operated flights from Memphis and Delta-operated flights from Salt Lake City. The two carriers expanded the partnership last week, when Delta placed its code on Northwest flights between Tokyo and New York JFK, San Francisco and Seattle Tacoma. Effective July 15, Delta and Continental will cooperate on certain Delta-operated flights from Atlanta and Salt Lake City and some Continental-operated flights from Cleveland.

Continental and Northwest already share codes on a wide array of flights, dating to 1998. Delta will enhance cooperation with both carriers by adding additional domestic and international codeshare flights. The three airlines first banded together last August as a response to the growing codeshare and marketing agreement between United Airlines and US Airways.