Descriptions and Aim of Code-Sharing

Code-sharing is a type of co-operation between airlines whereby they offer transport services under their own names by using (or co-using) the services of another carrier. The participating airline uses its own airline designator code on the service which is operated by the co-operating carrier, but it does not itself provide aircraft or personnel for the flight.

Code-sharing between airlines of one Contracting Party, between airlines of both Contracting Parties (bilateral code-sharing) and between airlines of one or both Contracting Parties and airlines from third countries (third-country code-sharing) is aimed at increasing the market presence of airlines worldwide. Since it optimizes, at the same time, operating costs and air traffic operations, it is an important airline marketing instrument.

In the interest of the consumers it is necessary to exert some influence in order to prevent that the operation of code-sharing services leads to a restriction of competition to the disadvantage of the consumers.
 
  
Traffic Rights Parameters for Code-Sharing

Code-sharing as an airline marketing instrument does, in an increasingly liberal environment, not require additional traffic rights regulations. This is the liberal approach pursued by Article 7 of Regulation No. 2408/92(EEC) of 23 July 1992. On this basis, the airlines of the Community have the possibility of combining the operation of air services within the Community and of using the same flight number.
  
 
Preconditions for operating code-sharing services:
 

• The operating as well as the participating airline have to be designated for the routes over which they fly and they have to hold the relevant air operator’s certificates.
     
• The operating carrier has to have 3rd/4th and/or 5th freedom traffic rights on the routes served, taking into consideration the agreed frequency and capacity framework. 
     
• Regardless of whether the participating airline is operating itself or not, it has to have the traffic rights required for every route section that it markets. The use of the capacity and frequency framework can be arranged in a flexible manner.
     
• Whether the required traffic rights for the operation of code-sharing services exist is examined on the basis of the filed flight plan.
     
• For the allocation to German airlines of frequencies in an agreed and limited frequency framework in bilateral air traffic, services actually operated by airlines have priority before code-sharing services.
     
• The code-sharing services are counted against the allocated number of frequencies of the operating carrier in the framework of the agreed frequencies.
      
• If the bilateral Contracting Partner grants, by way of code-sharing services, opportunities for additional services which exceed the agreed traffic rights and frequencies in 3rd/4th freedom and third-country traffic, this should be agreed in the interest of optimizing the operational possibilities of German airlines with the aim of increasing competition and improving the air transport service offer for the consumer. If possible, it should be ensured that such additional agreements can, in principle, be used by all designated airlines (also for their own services without code-sharing) for the duration of the code-sharing arrangement.
      
• Both the operating and the marketing carrier may file their own tariffs for the route which they serve together.

• the partner or third country demands a special agreement (i.a. in the bilateral air transport agreement, route schedule, memorandum of understanding),
     
• the partner country does not grant reciprocal rights,
     
• the third country does not grant reciprocal rights,
      
• the bilateral market in 3rd/4th freedom traffic is restricted for German airlines (as regards the approval of third-country code-sharing).

Responsibility of the German Transport Policy as Regards Protection of Fair Competition and Consumers
 
The responsibility of German transport policy extends more and more to the control of adherence to the protection against restriction of competition and to consumer protection in the framework of code-sharing arrangements
 

• as regards the adherence to fair competition according to the provisions of the national and international law on competition,
      
• as regards the clear information of the consumer on the code-sharing product offered.

• an airline or airlines of this Contracting Party,
     
• an airline or airlines of the other Contracting Party, and
     
• an airline or airlines of a third country, provided that such third country authorizes or allows comparable arrangements between the airlines of the other Contracting Party and other airlines on services to, from and via such third country; 

• hold the appropriate authority and
      
• meet the requirements normally applied to such arrangements
      
• in respect of  any ticket sold by it, make it clear to the purchaser at the time of sale which airline will actually operate each sector of the service and with which airline or airlines the purchaser is entering into a contractual relationship.

The designated airline or airlines of one or both sides may enter into code share arrangements with any carrier including airlines of third countries, provided that the airlines in such arrangements hold the appropriate authority.