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Code-Share Agreements

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Lorin Maurer bought her ticket on 3407 from Continental Airlines, and everything on the ticket [PDF] indicated she was flying Continental -- except for the fine print, which said the flight was operated by Colgan Air. So why are consumers largely kept in the dark about who is actually operating the planes they fly on?

It's because most major airlines enter into so-called code-share agreements with smaller regional airlines (see a 1999 US Airways-Colgan agreement which FRONTLINE obtained). This allows the majors to competitively outsource their flying while maintaining brand identity. According to Regional Airline Association president Roger Cohen, these agreements streamline the airline experience for the consumer, provide seamless airline service to smaller communities around the country, and allow individual companies to specialize in one particular aircraft.

The proliferation of code sharing over the past decade, and particularly since 9/11, has dramatically boosted the role of regionals which now account for more than 50 percent of the nation's daily departures. Continental Airlines, for example, now outsources 60 percent of its flights to regionals, like Colgan Air. Former Continental CEO Gordon Bethune told FRONTLINE that outsourcing to regionals "allows an airline to bid that and have a competitive relationship and make sure they get their flying done at the lowest cost."

The crash of Continental 3407, however, raised important questions associated with these code-share agreements. How do these contracts work? How closely do the majors actually monitor the operations of their regional partners? And, more importantly, who is responsible if something goes wrong?

[Read here Colgan Air's reaction to this FRONTLINE report.]

One of the key aspects of code-share contracts is to assure carrier continuity. They include very specific provisions that make it virtually impossible for the public to differentiate between the regional contracting airline, like Colgan, and the major carrier, like Continental. Everything from the logo and colors of the airplanes to the staff uniforms to the free magazines stashed in the seat in front of you carry the branding of the major. And this is all done with meticulous care, as is evident from this US Airways dress code pamphlet [PDF] obtained by FRONTLINE. Titled "Impressions of Excellence," the document lays out what all employees working on behalf of US Airways must wear -- down to the type of underwear and nail polish -- to create "a public perception about our capability as an airline." And, for most consumers, the perception works.

"No doubt in our mind that when she's buying this ticket, she's buying a flight on Continental," says Scott Maurer, father of Lorin Maurer. "This was a Continental flight for which she believed she had Continental pilots and Continental safety and Continental service, but, you know, we know different today."

Want to know more about who is flying your plane and the safety record of the carrier? The Investigative Reporting Workshop at American University has information on the major airlines, their code-share partners and the safety record of each carrier. See this map.

The Buffalo crash has once again heightened concerns about whether regional airlines are operating as safely as the major carriers with whom they contract. Following a string of regional accidents in the early 90s, the FAA increased regulatory requirements for the regionals in an industrywide push to establish "one level of safety." While the industry and the FAA say that all carriers must meet the same regulatory standards, many experts insist that does not in itself mean all are flying with the same level of safety. "[There's] no controversy among aviation safety professionals or airline safety managements that there should be one level of safety," says congressional investigator Clay Foushee. "But I think it's clear that we don't currently have one level of safety."

This one-level-of-safety controversy raises important questions about the safety responsibilities of the major airlines under the code-share contracts. If something goes wrong, like it did on Continental 3407, who is responsible? These contracts are considered proprietary by the companies and are difficult to find. This 1999 code-share contract [PDF] between Colgan Air and US Airways lays out the legal responsibilities and liabilities of the contracting carrier. The language on page 21 states that Colgan "employees, agents and independent contractors … for all purposes, under no circumstances shall be deemed to be employees, agents or independent contractors of US Airways." In addition, on page 22, Colgan is required to "assume[s] liability for and shall indemnify, defend, protect, save and hold harmless US Airways … from and against any and all liabilities, claims, demands, suits, judgments, damages and losses … for death of or injury to any person whomever."

Former Department of Transportation Inspector General Mary Schiavo, now a plaintiff's attorney, told FRONTLINE that these kinds of code-share contracts were typical and effectively let the major airlines "off the hook" for legal responsibility over the safety of their regional partner carriers.

More attention is now being paid to these code-share relationships. On Aug. 6, 2009, Congress held a hearing on "Aviation Safety: The Relationship Between Network Airlines and Regional Airlines." You can watch it here.

On Feb. 2, 2010, at the NTSB's final hearing on the crash in Buffalo, the board announced it would hold a public symposium on code sharing, with the head of the agency, Deborah Hersman, stating that "the board would examine government oversight and financial aspects of such relationships."

Congress is also looking into code-share agreements. On Feb. 3, 2010, the day after the NTSB concluded its year-long investigation of Flight 3407, the Chairman of the House Transportation and Infrastructure Committee, Rep. Jim Oberstar (D-Minn.) and the Aviation Subcommittee Chairman Jerry Costello (D-Ill.) asked the Department of Transportation's inspector general to further study safety issues in airline code-sharing arrangements.

In their letter the representatives write: "A better understanding of the relationship between mainline airlines and their regional code-share partners is needed to ensure one level of safety. This is particularly important given that the majority of air travelers are unaware when they purchase a ticket from a mainline airline that they may actually fly on a regional airline."

The letter asks the IG to investigate three main points:

DOT and the Federal Aviation Administration's legal authority to review agreements between mainline air carriers and their regional partners;

How mainline air carriers ensure that their regional partners operate at the same level of safety; and

Whether the flying public has adequate information about code-sharing arrangements to make informed decisions when purchasing an airline ticket.

posted february 9, 2010

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