Etihad Partners Air Berlin, Alitalia Sign Codeshare Deal

Air Berlin and Alitalia, both soon to be part-owned by Etihad Airways, have agreed to cooperate on over 400 routes from later this month, hoping to boost ticket sales.

The airlines, both battling to return to profitability, said the codeshare deal would cover 412 flights between Italy, Germany, Austria and Switzerland.

Under codeshare agreements, airlines agree to jointly market a particular route – though only one airline will operate the actual flight. The combined sales effort helps fill seats.

Strict foreign ownership regulations mean it is difficult for airlines in different regions to merge and expand their operations through traditional tie-ups, so codeshares are a way of increasing route networks without takeovers.

Codeshare deals, however, have not escaped scrutiny as European regulators fret over Abu Dhabi-based Etihad’s growing presence. Air Berlin was dealt a blow last week when Germany blocked around half of its codeshare flights with 29-percent shareholder Etihad.

Etihad has stakes in Air Berlin, Air Seychelles, Virgin Australia, Aer Lingus, Air Serbia and Jet Airways, and is in the process of buying stakes in Alitalia, which needed a government-engineered rescue package to keep it flying in 2013, and Swiss-based Darwin, which is is rebranding as Etihad Regional.

The strategy enables it to expand its network and funnels passengers through its Abu Dhabi hub.

Etihad has had to make changes to the agreement to buy a 33.3 percent stake in Darwin and Germany is looking at its relationship with Air Berlin to make sure it does not contravene regulations by exercising effective control over the airlines.

Etihad’s deal to buy 49 per cent of Alitalia is likely to win EU regulatory clearance by the end of the year with minor concessions, a source told Reuters last month.

Air Berlin shares were up 1.25 per cent at 1.22 euros at 1014 GMT, far off highs of over 20 euros seen back in 2007.

Etihad earlier on Tuesday reported a 29 per cent jump in third quarter revenue as sales achieved from its codeshare partners rose 44 per cent.