Anyone who knows, from experience, that reaching an agreement with just one partner can be a difficult process should be at least a little impressed with the record of Delta Air Lines, which put its second trilateral codeshare into operation on 1 May.
Having gained from its experience with setting up one such agreement with Swissair and Austrian Airlines on the Washington-Geneva-Vienna route, Delta has repeated the exercise, this time with Austrian and Malev on Atlanta-Vienna-Budapest.
This time, however, Delta is the operating carrier (Austrian operates the Washington-Geneva-Vienna route) and its two other partners put their codes on its daily B767-300ER flight.
Delta's manager corporate planning Europe, Andrew Lobbenberg, says the main hurdles Delta faced in setting up the Atlanta-Vienna-Budapest agreement were that Austrian and Malev first had to agree to codeshare, and then the size and price of their block seats had to be agreed.
'Whether the route made economic sense depended on how much of the plane the other carriers were going to take,' says Lobbenberg. Delta knew how many passengers it could generate but needed the additional traffic its partners could bring: 'The synergies created made a route fly which otherwise wouldn't. It really resulted in something being created.'
Not surprisingly, the effort that had to be put in to seal the deal was in proportion to the potential benefits. The final agreement gives Austrian 60 seats on board each flight, with Malev taking 20 and Delta the remainder. However, compromises had to be made along the way, and in this instance it was decided that Austrian would only codeshare on the Atlanta-Vienna sector and would continue to operate on Vienna-Budapest through its regional subsidiary Tyrolean Airways, which also codeshares with Malev. Delta has to market the local European sector by selling fifth freedom seats.
However, traffic forecasts for the overall route were based on projected transatlantic demand which is expected to fill two thirds of the aircraft. 'Anything in the local market will just be gravy,' says Lobbenberg. Delta gained some experience in marketing a similar fifth freedom sector when it operated from Frankfurt via Vienna to Budapest with a B727. 'That was hard to build but we did generate a reasonably sized market,' says Lobbenberg, adding that the attraction of a widebody is considerable.
One of the main reasons for Austrian's decision not to codeshare on the Vienna-Budapest sector was related to the use of different airport terminals in Budapest. As a result of the new trilateral codeshare agreement Delta has abandoned its former flights through its Frankfurt hub to Vienna and Budapest, in favour of separate codeshares on those sectors with Austrian and Malev respectively. This corresponded with Delta's stated goal of rationalising its Frankfurt operation.
Delta now codeshares with Malev on the Hungarian carrier's flights from both Frankfurt and New York into Budapest's T2. However Austrian operates into Budapest's T1. 'Austrian wanted T1 and we wanted T2; no-one wanted a split operation,' says Lobbenberg.
Some adjustments were also needed to boost the potential for connecting traffic both beyond Atlanta and beyond Vienna. 'Austrian added an additional wave at Vienna to chime into a bank of flights to and from eastern Europe, and this obviously chimes into the bank of departures at Atlanta,' says Lobbenberg. The route is the first direct link between the main hubs of Delta and Austrian, part of the alliance grouping with Swissair and Sabena. Delta estimates that the link-up will connect over 1,800 markets via the two hubs. Delta also codeshares on Austrian's daily New York-Vienna service.
Unlike Swissair, Austrian does not currently codeshare on Delta flights beyond Atlanta although Delta does put its code on Austrian's flights from Vienna to Kiev, Odessa, Frankfurt and Hamburg.
The US Department of Transportation's tentative approval of the Delta group's request for antitrust immunity should enable them to develop and market connecting services beyond one another's gateways more freely.
So far, Delta's conservative forecast for 70 per cent load factors on the route has been overtaken by advance bookings running at 90 per cent of capacity for the first three months of operations. These should be further boosted by the Olympic Games at the end of July. Projections are for around one-third business traffic and two-thirds leisure.
Jackie Gallacher
Source: Airline Business
