Sponsor Message:
Civil Aviation Forum
My Starred Topics | Profile | New Topic | Forum Index | Help | Search 
Special-Pro-Rate-Agreements (SPA)  
User currently offlineFlumuc From Germany, joined Oct 1999, 392 posts, RR: 0
Posted (14 years 2 months 2 weeks 1 day 16 hours ago) and read 24964 times:

Hi,
does anybody of you know what the SPA is? I only know that is like an alliance between USAirways, DeutscheBA, Finnair, Iberia, TAP Air Portugal, Emirates and Iberia.

3 replies: All unread, jump to last
 
User currently offlinePatroni From Luxembourg, joined Aug 1999, 1403 posts, RR: 14
Reply 1, posted (14 years 2 months 2 weeks 1 day 13 hours ago) and read 24938 times:

Hi!

a SPA is an agreement between airlines to give each other a fixed price for interlining. I don't know whather it is also called SPA in passenger aviation, but in the cargo business it means that e.g. LH and CX set up a SPA, including that cargo under LH airwaybill can be transported on a CX flight HKG-TPE for a defined rate of 1.00usd/kg while CX can fly it's cargo on LH's FRA-Bilbao service for 50ct/kg (fictious data, just as example).

Sometimes there are certain minimum amounts, sometimes these agreements are only unilateral.
These interlining agreements help airlines to carry cargo and passengers to places which they themselves don't serve.

Best regards,

Thomas


User currently offlineCO767-224ER From , joined Dec 1969, posts, RR:
Reply 2, posted (14 years 2 months 2 weeks 20 hours ago) and read 24934 times:

Proration is the basis for how interlining of both passengers and cargo takes place. Put simply, proration is the division of passenger/cargo revenue between two or more carriers which paricipate in the routing. When a carrier sells a ticket to a passenger for an interline itinerary, they are collecting the entire fare. When the interlining carrier picks up the passenger, and transports them, they have not recieved any money from that passenger. This airline will need to "bill"
the carrier which issued the ticket, and collected the fare. Prorate agreements are what settles the billing issue between the two (or more) carriers, so that the non-issuing carrier will recogonize revenue for transporting the interline passenger.

In terms of passenger interlining, most international carriers agree to abide by the terms of the Multilateral Proration Agreement (MPA). The MPA was devised by a meeting of carriers at an IATA sanctioned meeting called the General Prorate Meeting. The cornerstone of proration under the MPA are prorate factor miles. Each sector a carrier operates are assigned a weighted mileage, which is loosely equivalent to the actual mileage. When a passenger flies an interline routing, each airline carries the passenger a certain percentage of the weighted miles on the routing. Under the MPA, each carrier is entitled a percentage of the collected fare which is proportional to the percentage of the routing they carried the passenger. This method for dividing up revenue by percentage of weighted mileage is called Straight Rate Proration, or SRP.

Two or more carriers may enter into a Special Prorate Agreement (SPA), when they believe there is a commercial benefit to having such an arrangement. The SPA, when in place, supercedes the Multilateral agreement for tickets and routings covered in the SPA. Most SPA's are unilateral or bilateral, meaning they apply to tickets issued by one or two carriers. In some rare cases, the SPA may apply to tickets issued by more than two carriers.

There are many different methodologies for deriving special prorates. The most common is the fixed rate, which is simply a fixed dollar amount that one carrier pays to another when they carry another airline's passenger. Other types of special prorates are; a percentage of the full local fare, or a discount off of the SRP. Most imporantly, a carrier will need to establish a SPA which will provide a commercial advantage over the MPA. Specifically, a carrier will want to negotiate a lower prorate for tickets they issue, and a higher prorate for tickets they accept from other carriers.

Special prorate agreements have a variety of advantages. One, they increase the market presence that a carrier has. For example, they can offer more destinations, through interlining, than they would be able to offer on their own. Secondly, prorate agreements provide a great deal of incremental revenue to a carrier's own services. Without the prorate agreement, a carrier is only taking passengers that they were able to sell a ticket to. With the prorate agreeement, the airline is able to take passengers from other carriers, in order to supplement their own customers. This type of traffic is very valuable in low load markets, where the operating carrier needs to get their hands on every passenger they (or another carrier) can find.

SPA's exist both inside and outside of the alliance structure. Just because you have an SPA with a carrier does not necessarily mean you have an alliance. Many carriers who recognize a commerical benefit to a SPA will enter in to one with an airline who many generally be considered a competitor.

In the context of airline alliances, however, the SPA is one of the primary building blocks of the partership, and is usually one of the first steps to be completed in an alliance.

I hope this lengthy posting is of some use to those of you who want to understand who passenger interlining and proration takes place.


User currently offlinePatroni From Luxembourg, joined Aug 1999, 1403 posts, RR: 14
Reply 3, posted (14 years 2 months 2 weeks 14 hours ago) and read 24926 times:

Hi!

You gave a very good definition for proration for pax flights, seems I was already too sleepy for such an amount of details when I posted my comments  

Are you with Continental Airlines?

BRGDS,

Thomas



Top Of Page
Forum Index

This topic is archived and can not be replied to any more.

Printer friendly format

Similar topics:More similar topics...
Any Interline Agreements Between VX And V Blue posted Thu Aug 27 2009 07:44:14 by RJpieces
AV: Colombia 200 Yrs Indepence Special Livery posted Tue Aug 25 2009 10:29:06 by A388
Calculation Of Acmi Rate And Dry Lease Rate posted Sat Aug 22 2009 04:06:55 by Vimanav
Is This Special Delivery The Fix For The 787? posted Tue Aug 18 2009 18:46:54 by Tommyy
CP Air Special Services & Liveries? posted Tue Aug 18 2009 08:03:23 by Tango-Bravo
New "special" Cs For OS posted Mon Aug 10 2009 08:58:45 by PUnmuth@VIE
Long-term Impact Of Transatlantic ATI Agreements posted Sat Aug 1 2009 19:13:08 by LHCVG
AA 737's: Special Inspections For Scratches posted Fri Jul 31 2009 23:50:52 by N49WA
Filming A Video: Pro-US Airways Tips/Rules? posted Sat Jul 25 2009 21:29:25 by StarAlliance38
AC 77W In Special Olympic Color Scheme posted Fri Jun 19 2009 11:24:03 by AC_B777
DL's Special SLC Red-Eye Bank On 1 Dec posted Mon Nov 11 2013 16:01:56 by redzeppelin