Exclusive: Internal Source Speaks on American & Delta Interline Agreement End, UA Updates Policy

As was heavily reported, American and Delta ended their interline agreement as of September 15th. At the time, the speculation was that Delta had asked American for additional compensation to reaccommodate AA passengers during irregular operations above the industry norm. For years, airlines all had a standard discounted rate that allowed carriers to secure a seat for stranded passengers during irregular operations; however Delta decided to negotiate additional fees from American (and United). Well, according to an anonymous Delta source, the airline felt this was necessary due to how often AA and UA were using DL metal for their passengers:

Both airlines sent us a significantly greater amount of passengers than we sent to them over the last year and proper compensation was deemed appropriate.

The statement is confusing as even if the number of passengers being sent to Delta was much greater, they were being compensated on a per seat basis for seats that would have otherwise gone empty. Perhaps the fees were thought to be necessary for the additional work that’s required by agents to take over the flight coupons?

Below are the letters that United and American sent to their employees regarding the matter (interestingly enough, it appears that UA paid up but is instructing agents to book on Delta only as a last resort (United, then joint venture partners, then other Star Alliance partners, Use Delta (DL) only as a last resort. DL should only be considered when all other options have been exhausted as our settlement rate with DL is significantly higher than with most carriers).

United

Our irregular operations policy for rebooking on other airlines (OA) provides flexibility when there are no options on United. Settlement rates vary between OA carriers and preference should be given to rebooking first on United, then Joint Venture (JV), followed by other Star Alliance carriers before considering other interline airlines.

Although our OA rebooking policy has not changed, Delta (DL) should only be considered when all other options have been exhausted as our settlement rate with DL is significantly higher than with most carriers.

As a reminder:

• OA may be used if the United rebooking option is not acceptable to the customer and does not get the customer to their final destination within four hours of their originally scheduled arrival.
• Always offer options on United first, followed in order of preference by JV partners, then other Star Alliance carriers. Use DL only as a last resort.
• Make every attempt to book long-haul portions on United and consider using a United connection before offering a non-stop flight on an OA.
• Avoid rebooking on DL and other interline airlines, as their settlement rates are higher.

American

Dear Airport Agents, Premium Services Representatives and Reservations Representatives,

As you know, we’ve been very focused on ensuring that we have strong service recovery programs in place to help during those times when the weather isn’t on our side or when other disruptions to our operation occur. One tool that we use to help get customers back on their way during irregular operations are the interline agreements we have with various carriers that allow us to reaccommodate passengers on other airlines at a negotiated rate. These agreements also allow airlines to book, sell, ticket, and check baggage on one another. Interline agreements are common across the industry and they generally include a standard, discounted rate for calculating how much is owed by one carrier to another to use their seats during irregular operations.

In April of this year, participating airlines across the industry agreed to new rates for moving customers between carriers during irregular operations. Delta recently decided to go outside of that joint agreement and negotiate an individual agreement with American. We have been unable to come to terms on an agreement with Delta and, as a result, have mutually agreed to end our interline agreement effective September 15. From that date, neither airline will offer interline services to each other, including the ability to rebook passengers at discounted rates on the other carrier when flight disruptions occur. (Note that we will continue to honor valid tickets already purchased on or before September 14 through the existing interline agreement, so there will be no changes there.)

While this is a change, it will not affect our commitment to reaccommodate customers during irregular operations. The new American now has the world’s largest and best network and our team is doing a great job of running a reliable airline. With nine hubs and gateways and nearly 7,000 daily flights, we have more ability to re-route our customers during operational disruption than any other airline in the world. We also have options with our joint business and oneworld partners, plus we have an interline agreement with United, which has the second largest network, and many other airlines, such as Alaska Airlines.

We will have Q&As and guidelines available in Web Ref soon, and of course your station management will be available to answer any questions and provide additional details.

Thanks again for all of your exceptional work and your commitment to our customers.

Delta

Delta and American Airlines (including U.S. Airways) will no longer have an interline ticketing and baggage agreement starting on September 15, 2015.

The discontinuation of the interline and baggage agreement will have virtually no impact on Delta customers, who will continue to enjoy access to Delta’s global network and operational excellence, as well as the reliable route networks of Delta’s key alliance partners worldwide.

Key Points for Travel Professionals

Delta and American Airlines (including US Airways) will no longer have an interline ticketing and baggage agreement beginning Sept. 15. The agreement provided, among other things, the ability for carriers to rebook their own customers on other airlines during irregular operations (IROPs).

Thanks to stellar operational performance, Delta customers enjoy an industry-leading experience. However, the industry agreement was no longer beneficial to both carriers. In July, for example, American sent passengers to Delta for reaccommodation at a five-to-one ratio.

Delta has run a top-tier operation for the past several years, and in 2015 has operated 91 days with 100 percent completion factor, meaning no flights were canceled. U.S. Department of Transportation statistics through July show Delta’s year-to-date completion factor at 99.3 percent.

The cancellation of the interline agreement with American (including U.S. Airways) means that tickets booked on or after September 15, 2015, may no longer include flight segments operated by Delta and American on the same ticket.