Lufthansa ends code-share deal with Turkish Airlines

http://www.hurriyetdailynews.com/lu...lines.aspx?pageID=238&nID=58578&NewsCatID=345

Lufthansa has announced it plans to terminate their codeshare agreement with Turkey’s flagship carrier, Turkish Airlines (THY), by March 2014, saying the agreement no longer makes commercial sense. Turkish Airlines, however, has criticized the decision, publicizing its hope for Lufthansa to reconsider its decision.

Lufthansa’s spokesperson has said that the airline had concluded the codeshare partnership to be economically unprofitable for the German carrier, following an in-depth review of the deal. The codeshare agreement, a common occurrence in aviation, involves several airlines party to the agreement issuing tickets on the same aircraft on pre-determined routes, while operating flights under the other’s flight code.

Read More: http://www.hurriyetdailynews.com/lu...lines.aspx?pageID=238&nID=58578&NewsCatID=345

 

Thanks for sharing, sobore! Does this mean that any air carrier in an airline alliance can opt out of codeshare with other air carrier's scheduled flights? If that's the case, why should the carriers even belong to the same airline alliance?
FWIW, US/UA elites will get multiples of the miles (e.g., 1.5, 1.75, 2) for miles flown on US/UA, and also LH, but not TSY - that's always a 1.0.

 

Not all carriers within an alliance code-share all other carrier's flights (or even any). It's a separate 1:1 agreement.

 

http://www.bloomberg.com/news/2013-...stirs-air-miles-spat-with-ally-lufthansa.html

Turkish Airlines (THYAO) urged Star Alliance partner Deutsche Lufthansa AG (LHA) to review plans to pare passenger rewards from code-share flights to German destinations, as the two airlines fight for customers in Europe’s largest economy.

Lufthansa plans to cut back on the so-called status miles it awards on Turkish code-shared flights, according to the company. While passengers still get miles that let them purchase goods or flights, the change makes it harder for them to gain frequent-traveler status using Turkish flights.

“We do not approve the unilateral decision of Lufthansa,” Turkish Airlines, formally known as Turk Hava Yollari AO, said in an e-mailed release. “Turkish Airlines provides its services to all passengers of Star Alliance member airlines.”


I thought the conventional wisdom had always (?) been that it's the operating carrier that decides how many miles they are willing to give the passenger when crediting to a partner program (and they'd then essentially buy those miles from the program). So why is this positioned here as Lufthansa deciding to reduce the miles for M&M pax flying on Turkish flights?

 

Thanks, HaveMilesWillTravel!
And so my question is - given the example of LH and THY - why do they even belong to the same alliance?
What are the incentives for belonging to an airline alliance, and what are the disincentives?
And what would it take for an airline to be "banned" from an airline alliance?
Newscience

 

I don't know what it takes to be banned from an alliance. But it's not uncommon to not code-share within an alliance. E.g., look at Singapore Airlines. Which major US carrier that is a member of *A is missing?

http://www.singaporeair.com/en_UK/about-us/psh-codeshare-psh/

Airlines also often code-share with non-alliance partners. E.g. United puts its code on some flights operated by Air Lingus or Hawaiian Airlines. Presumably that's because it fills gaps in United's route map, i.e., it lets United sell tickets to its customers that its customers want. Perhaps LH would rather not route its customers through Istanbul to Asia and have them use their own metal, so code sharing is not in their interest?

 

HaveMilesWillTravel,
Interesting points all, and many thanks!
Newscience

 

I don't think that's true -- otherwise, to find out (for instance) how many Aegean miles I'd earn for a United flight, I'd visit the United web site rather than the Aegean Partner Earning page.

 

Unfortunate but predictable development.

 

While I understand that LH doesn't want to code-share with TK if TK is taking LH's passengers on to destinations already served by LH (e.g. LH doesn't want you to fly MUC-IST-HKG instead of MUC-FRA-HKG.) Nevertheless, I would think that TK augments the LH route system in Africa, Arab countries and southern Asia.

However, TK often discounts business class which I expect LH hates.

It is interesting how being in an alliance differs from code-sharing or publishing through fares. So for example while UA is in the same alliance with SQ and TG, UA has few through fares with them, and in fact SQ will put you on VX metal ahead of UA metal to reach cities in USA served by VX. Similarly TK seems to publish fares using B6 rather than UA or US.

 

LH also doesn't like it that TK's J is in most cases a better product than LH's own, and if it wants to price its own product accordingly, it should be less costly than TKs...but as we know, it isn't.

What's more as some of you may recall, MOL - as always - provided a great quote about LH's general enthusiasm for competition. See below:

http://www.theguardian.com/business/2009/jun/04/michael-oleary-ryanair-airline-industry

 

Knowing a number of turkish businesspeople and germans travelling to IST this move will probably hurt LH the most. Instead of booking LH tix with the odd TK codeshare flight to have the ticket with the airline that hosts your frequent flyer programm people now will book with TK directly and as they don't get full status miles with M&M they will probably credit to other *A or TK program. As TK clearly is the better airline for travel between numerous german airports and IST I see LH starting to reduce service from end of 2014 or offer aggressive low fares (which will then be undercut by TK). In the mid term view the recent moves of LH will hurt LH business to Turkey - I'm sure of that.

 

LH really doesn't compete well for the business travel market when it uses the Eurobiz product on these 3-4 hour flights while TK generally has a proper seat on the 738's and widebodies