Does Code Sharing Mean Caring for Air Travelers?

Three carriers say their code-sharing deal will help consumers, but consumers and government officials would rather take a pass.

At the core of the Department of Transportation's objection to agreement among Delta(DAL), Northwest (NWAC) and Continental (CAL) is that it would harm competition and, therefore, consumers.

Under the code-sharing agreement, Delta will be able to sell seats on Northwest or Continental flights and vice versa, allowing all three carriers to gain more customers without having to increase costs related to adding more flights and personnel. But a closer look at the situation reveals that few have any idea how the agreement will actually affect consumers until it's implemented.

Since the trio account for more than a third of the entire domestic air travel market, the DOT's fears aren't exactly unfounded. Then again, the small domestic code-share agreements currently in place seem to have benefited consumers on some level. But a marketing agreement on this scale, one that allows the third-, fourth- and fifth-largest airlines to combine their efforts, has never been attempted before.

Consumer groups feel that travelers will face higher prices and fewer options as carriers use the marketing agreement to make their operations more efficient in markets where they once competed. "With this agreement, there are 3,214 markets where two or more of the carriers have overlapping routes," said Kevin Mitchell, president of the Business Travel Coalition, a group representing business travelers that is in favor of the DOT's restrictions. "That would clearly give them the opportunity to reduce flights and cut back on service."

This is one of the major reasons why the DOT wants to force the code-sharers to fly at least 25% of all new code-share flights in markets that they didn't previously serve. In the DOT's eyes, allowing three massive carriers to share customers and make their operations more efficient could mean that customers in, say, Tulsa, Okla., have fewer flights. But for the carriers, expanding to new markets will add in costs they can't afford.