Scenario: a passenger buys a ticket from Carrier A for Hanoi–Paris, only to learn at the airport that Carrier B operates the flight — and when baggage goes missing, each carrier blames the other. Behind that ticket sits a code-share agreement, and behind the agreement a three-layer legal framework that even large carriers can trip over: aviation-regulator approval, competition law, and passenger liability under international conventions.
What code-share is — and why it needs approval
In a code-share, one airline (the marketing carrier) places its flight code on a flight operated by another airline (the operating carrier). Alliances go further: shared networks, lounges, loyalty programs. In Vietnam, operating cooperation agreements between airlines — especially involving foreign carriers flying to/from Vietnam — require approval from the competent aviation authority (the Civil Aviation Authority of Vietnam). The reason: each flight attaches to traffic rights under bilateral air-services agreements and operating permits; a carrier cannot “lend” its traffic rights without permission. Signing first and seeking approval later reverses the proper sequence and can render code-shared flights unauthorized operations.
Layer two: competition law
Two carriers on the same route that coordinate fares or divide markets may enter a prohibited anti-competitive agreement under the 2018 Competition Law. Purely technical code-sharing (one carrier selling seats on another’s flight without fare coordination) carries lower risk, but deep alliances — coordinated schedules, fares, revenue — may be scrutinized as restrictive agreements or economic concentrations above thresholds. International practice shows competition authorities often clear alliances only with conditions (slot releases, fare commitments). Vietnamese carriers joining global alliances should assess competition impact at the negotiation stage, not after an investigation starts.
Layer three: who answers to the passenger?
This is what passengers care about most and where disputes erupt. The 1999 Montreal Convention (Vietnam is a party) distinguishes the contracting carrier (the ticket seller) from the actual carrier (the operator): both may be liable, and passengers may claim against either. The marketing carrier cannot wash its hands because “another airline operated the flight” — the ticket is its contract with the passenger. Code-share agreements must allocate: which party handles complaints and delay/cancellation/baggage compensation; internal reimbursement mechanics; and the duty to inform passengers of the actual operator at booking (several jurisdictions treat concealing this as a consumer-information violation).
Four indispensable contract clauses
One, scope and conditions precedent: routes, applicability periods, and “effective only upon regulatory approval”. Two, revenue and cost sharing: the split formula, settlement currency, cross-audit rights. Three, passenger liability and internal indemnity when one party pays compensation on the other’s behalf. Four, competition compliance and termination: no exchange of sensitive pricing information beyond the permitted scope, and termination rights if competition or aviation authorities so require.
Conclusion
A sound code-share stands on three legs: aviation-authority approval, competition-law compliance, and passenger protection under the Montreal Convention 1999. Airlines should bake these three tests into their internal review checklist before signing — fixing an executed agreement always costs more than negotiating it properly.
Frequently asked questions
1. Do airlines need approval for a code-share?
Yes. Operating cooperation agreements, especially with foreign elements, require prior approval from the competent aviation authority (CAAV).
2. Which carrier pays compensation for a delayed code-share flight?
Under the Montreal Convention 1999, passengers may claim against the marketing or the operating carrier; the ticket seller cannot refuse on the ground that another airline operated the flight.
3. Can airline alliances breach competition law?
Depending on depth: fare coordination or market sharing may qualify as restrictive agreements under the 2018 Competition Law.
4. Must airlines disclose the actual operator?
Yes — an information duty at booking; concealing the actual operator may breach consumer information rights.
This article has been quality-reviewed by the FLAW AI Legal Council