Flex Fares - a new interline system

Interline System

  • On a worldwide basis, a large proportion of journeys require the services of two or more airlines in order for the passenger to complete a single journey
  • The interline system is the global network of international air transport services linking most cities with scheduled air services
  • It provides a travel option that enables:
    • fully flexible fares
    • allows last minute changes/routings on other airlines
    • provides a single ticket (fare) for a journey using 2 or more carriers
    • provides for baggage transfer at connecting points
  • Interlining provides consumers with additional flexibility when:
    • direct flights are not operated on the day or at the time the consumer wishes to travel
    • the passenger wishes to stop at an intermediate city or cities
    • the passenger chooses to fly on different airlines on the outbound and the return journeys
  • Common fares and rules for multilateral interlining are required for such a common system and have been in place for over 50 years
  • Governments have understood the benefits the interline system and provided immunity from competition laws that would otherwise prohibit agreements on common fares between airlines

Current Status

  • Immunities have recently been scaled back
    • EU DG competition has acknowledged the benefits of interlining but wants another mechanism to be used
    • The block exemption for tariff agreements:
      • within EU ended in December  2006
      • between EU-USA and between EU-Australia ended in June 2007
      • between EU and the rest of the world ended in October 2007
      • Australian competition authority ACCC to end immunity at the end of June 2008 for markets to/from Australia
  • Without these block exemptions, IATA members cannot agree on interline fares and IATA has developed an alternative mechanism to address competition concerns whilst maintaining the benefits of interlining for consumers
  • Competition authorities are encouraging IATA to pursue this development

IATA Flex Fares

  • Flex Fares are produced by a mechanism that automatically calculates interlineable fares based on average carrier fares in affected markets
  • An interlining premium is added to account for the added flexibility of these interline fares
  • Flex Fares are now used for intra-Europe and markets to/from Europe, except where government approvals are pending
  • Flex Fares for the markets between US and EU, Australia and USA in 2007 awaiting implementation, pending government approval
  • In 2008, flex fares will be implemented in other parts of the world, including the markets between Europe and Asia, Middle East, Africa, and markets to/from Australia

Updated: June 2008