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U.S. discounter Frontier Airlines plans to codeshare with Volaris, a Mexican airline with a similar no-frills model that seeks to coax travelers off buses and onto planes, in what the carriers say is the first codeshare agreement between two ultra-low-cost carriers.
Under the proposed agreement, the airlines will sell tickets on each other as soon as this spring. That will make it possible for a customer to fly from Mexico City to San Antonio on Volaris, and catch a Frontier segment from San Antonio to Atlanta, for example.
If the deal is approved by regulators, as expected, Volaris estimates its passengers will be able to reach 20 more U.S. cities than they can today.
Frontier customers, meanwhile, will gain access to many of Volaris’ 40 destinations in Mexico. Today, Frontier only flies to three cities in Mexico —Cancun, Los Cabos and Puerto Vallarta.
Larger global airlines, including as United Airlines, American Airlines and Delta Air Lines, often codeshare with foreign carriers, allowing their customers to reach destinations where they do not fly. But low-cost, and ultra-low cost airlines generally have not sought such agreements, calculating that the costs do not outweigh benefits from the added revenue these agreements produce.
As the term suggests, ultra-low-cost carriers focus more on cost control than other airlines. In 2016, Frontier spent an average of 5.74 cents to fly one seat for one mile, not including fuel, a metric the industry calls CASM, for cost-per-available-seat-mile. Southwest Airlines, a low-cost airline, typically spends a little less than 9 cents to fly one seat for one mile, not including fuel.
‘Costly and Complex’
That is beginning to change, however. In the past couple of years, more low-cost and ultra-low-cost airlines have begun cooperating with other carriers, though few have gone so far as to codeshare with other airlines. Last year, EasyJet created what it calls Worldwide by EasyJet, a program that makes it easier for customers flying WestJet, a Canadian low-cost airline, and Norwegian Air, to connect to EasyJet flights.
But EasyJet’s program is not a traditional codeshare, and it puts more onus on customers to make sure the connections work, requiring them to book at least a 2 hour and 30 minute connection, far more time than is typical for codeshare agreements. In a release outlining its plans, EasyJet criticized traditional codeshare agreements as “costly and complex.”
Indeed, airlines must clear considerable logistical hurdles to make codeshares work. First, carriers must ensure their reservations systems can correspond with each other, permitting them to share customers. Second, airlines must make sure they can accept and transfer each other’s baggage, so crews in San Antonio can efficiently transfer bags from Volaris to Frontier. Third, the airlines must take care of each other’s passengers when flights are delayed or canceled.
Many discount carriers don’t like to sell connecting itineraries at all — even when both flights are on their airline — because they worry costs will creep up as passengers miss connections, and they’ll need to accommodate them on another airline or at hotels. Frontier generally prefers selling non-stop flights, though recently it expanded the number of connections its customers can make.
Still, Volaris and Frontier are closer than most airlines, as Frontier’s majority owner, Indigo Partners, also owns a substantial portion of Volaris, a publicly traded company. Late last year, Indigo negotiated with Airbus for a massive 430-aircraft order to send new planes not only to Volaris and Frontier, but also to two other discount airlines affiliated with Indigo.
This is not the first time Volaris has sought a codeshare agreement with a U.S. airline. In 2008, Southwest said it intended to codeshare with Volaris within two years. But the airlines never created a seamless ticketing process. Instead, they briefly allowed customers to essentially combine two tickets — one on Southwest and one on Volaris. By 2013, the airlines stopped cooperating.