Ajoke Ojikutu February 26 2014 Codesharing in the Nigerian aviation industry George Etomi & Partners | Aviation - Nigeria Ajoke Ojikutu Aviation DefinitionCodesharing in NigeriaDefinitionCodesharing is an aviation business arrangement whereby two airlines share the same flight. A seat can be purchased on an airline's flight, but the flight is actually operated by another airline under a different flight number. The term 'code' refers to the identifier used in flight schedules. This system allows an airline to offer greater access to cities across its network without having to offer extra flights, and makes connections simpler by allowing a single booking to encompass multiple flights. Most major airlines now have codesharing partnerships with other airlines.The term 'codesharing' was coined in 1989 by Qantas and American Airlines, and in 1990 the two airlines offered their first codeshare flights between an array of Australian and US cities. Since then codesharing has become widespread in the airline industry, particularly since several large airline alliances have been formed. Under a codesharing agreement, the airline that actually operates the flight (ie, providing the aircraft, crew and groundhandling services) is the operating carrier. The company or companies that sell tickets for that flight but do not actually operate it are marketing or validating carriers.Codesharing in NigeriaCodesharing is not a popular model within the Nigerian aviation industry. Local carriers are facing some major challenges, such as a general reduction in business, which can result in airlines making a loss – this is mainly due to various accidents in the past few years. Many local airlines have folded, with some going bankrupt.Ongoing efforts being made by the government and aviation bodies relate to, among other things:passenger safety;infrastructure development at airports;the financial capacity of airlines; andthe lack of cooperation among domestic airlines – a challenge which has been identified as a barrier to codesharing.Only one airline has attempted to establish a codesharing agreement. In June 2011 Air Nigeria planned to codeshare with US carrier Delta Air Lines on Delta-operated services between Atlanta and Lagos. The two airlines had planned to start a reciprocal frequent flyer agreement that would allow customers from Delta's SkyMiles and Air Nigeria's Eagleflier programmes to earn and redeem miles for flights. However, this did not materialise, as Air Nigeria ceased operations in September 2012 due to a dispute.However, it has been recommended that Nigerian airlines should merge and form alliances that would enhance their performance, generate revenue and ultimately ensure the survival of the industry. There are two reasons behind this thinking:No single airline in Nigeria is believed to be financially viable enough to acquire another domestic airline (the financial burden would be too much to bear for the acquiring airline company, especially in view of current lending interest rates); andThe operational and management culture of Nigerian airlines differs from that in other countries.Therefore, it has been proposed that the best possible solution for the survival of domestic carriers is a codesharing arrangement, with the Asset Management Corporation of Nigeria (AMCON) acting as the clearinghouse. For example, if Arik Air had a flight from Abuja to Lagos at 1:00pm, and IRS Airlines had a flight at the same time, but with only a few passengers, IRS could transfer its passengers to the Arik flight for an agreed fee.The accounts for the exchange of passengers would be organised through AMCON on a weekly or monthly basis. This would help to alleviate the operational losses suffered by the daily competing routes flown by the carriers. However, these proposals are still in the development stage.For further information on this topic please contact Ajoke Ojikutu at George Etomi & Partners by telephone (+234 1 462 1660), fax (+234 1 262 1218) or email ([email protected]). The George Etomi & Partners website can be accessed at www.geplaw.com.