Airline Code Sharing & Special Prorate Agreements (SPAs)

Special Prorate Agreements (SPAs)

Special Prorate Agreements (SPAs) are agreements between two or more airlines that govern the sharing of revenue and expenses on specific routes. SPAs are often used when airlines codeshare on a route, but they can also be used in other situations, such as when airlines have a joint venture on a route or when one airline leases aircraft to another airline.

SPAs can be complex, but they typically cover the following areas:

• Revenue Sharing: SPAs typically specify how revenue from shared flights will be divided between the airlines. This can be done on a number of different bases, such as the number of seats each airline sells, the distance each airline flies or the type of aircraft each airline uses.
• Cost Sharing: SPAs typically also specify how the costs of shared flights will be divided between the airlines. This can include costs such as fuel, landing fees and crew costs.
• Marketing and Sales: SPAs may also include provisions on how the airlines will market and sell shared flights. This can include things like branding, advertising and customer service.

SPAs can be a valuable tool for airlines, as they can help to improve efficiency and profitability. However, it is important to carefully consider all of the factors involved before entering into a SPA.

Here are some of the potential benefits of SPAs:

• Increased Revenue: SPAs can help airlines to increase their revenue by allowing them to access new markets and by offering more flights to passengers.
• Reduced Costs: SPAs can help airlines to reduce their costs by sharing the costs of flights and by improving efficiency.
• Improved Customer Service: SPAs can help airlines to improve their customer service by offering more flight options and by making it easier for passengers to book and travel on multiple airlines.

Here are some of the potential risks of SPAs:

• Reduced Competition: SPAs can reduce competition between airlines, which can lead to higher prices and fewer choices for passengers.
• Complexity: SPAs can be complex agreements and it can be difficult to ensure that all of the parties involved are happy with the terms of the agreement.
• Risk of Disagreements: There is always a risk that the airlines involved in a SPA will disagree about how to interpret or implement the agreement. This can lead to disputes and delays.

Overall, SPAs can be a valuable tool for airlines, but it is important to carefully consider all of the factors involved before entering into a SPA.

Special Prorate Agreements (SPAs) are Bilateral (Between two Airlines) or Multilateral (Between more than Two Airlines) agreements between airlines that govern the sharing of revenue and expenses on specific routes or markets. SPAs are typically used in the following situations:

• Codeshares: When two or more airlines codeshare on a route, they typically enter into a SPA to govern the sharing of revenue and expenses.
• Joint Ventures: When two or more airlines form a joint venture on a route or market, they typically enter into a SPA to govern the sharing of revenue and expenses.
• Aircraft Leases: When one airline leases aircraft to another airline, they typically enter into a SPA to govern the sharing of revenue and expenses.

SPAs can be a valuable tool for airlines, as they can help to improve efficiency and profitability. For example, SPAs can allow airlines to:

• Access new markets without having to invest in their own aircraft and crew.
• Offer more flights to passengers, which can lead to increased revenue.
• Reduce costs by sharing the costs of flights and by improving efficiency.
• Improve customer service by offering more flight options and by making it easier for passengers to book and travel on multiple airlines.

Here are some examples of how SPAs are used in the real world:

• Delta Air Lines and Air France have a SPA that governs their codeshare agreement on transatlantic flights. Under the SPA, the two airlines share revenue and expenses on a pro-rata basis, based on the number of seats each airline sells.
• American Airlines and British Airways have a SPA that governs their joint venture on transatlantic flights. Under the SPA, the two airlines share revenue and expenses equally.
• Emirates and Etihad Airways have a SPA that governs their codeshare agreement on flights between the Middle East and Asia. Under the SPA, the two airlines share revenue and expenses on a pro-rata basis, based on the distance each airline flies.

SPAs are a complex topic, but they play an important role in the global airline industry. By allowing airlines to share revenue and expenses, SPAs can help airlines to improve their efficiency and profitability.