Interconnect – the Common Landing Approach for Airlines and Operators

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Even as operators individually compete for customer loyalty and market share, they have to jointly provide access to each others’ infrastructure so that all of them put together can match rising volumes of subscriber usage. This is where an Interconnect platform comes into play, allowing operators to offer varied services, fair pricing and maximum reach to each others’ subscriber base through predetermined revenue-sharing agreements. When one examines the interconnect model closely, it’s not really very different from the aviation industry model where several competing airlines utilize code-share agreements to offer maximum destination reach and economical plans to their passengers. In fact, the similarity does not end here. For example, if one compares the types of code sharing agreements in both industries, the following methods are surprisingly common:
Airline industry Mobile operators
Bilateral agreements for point-to-point transit. This provides a direct connecting flight for passengers of one airline, C1, to avail the services of carrier, C2, in order to traverse between two airports. Bilateral contract: In this arrangement, operators have bilateral agreements to allow each others’ subscribers to communicate freely using their respective infrastructure.
Hub and spoke model: Here, passengers move between airports not served by direct flights having to change planes at a common hub en route to their destination. Hubbing: In the event two operators do not have a bilateral contract, they can use the services of a common hubbing partner which has agreements with both operators to provide connectivity with their mutual subscribers.
Focus city: A focus city is not a hub but an airport from where various airlines have non-stop flights to several destinations other than hubs. This is primarily used by low cost carriers to fly to several destinations that are not connected to the hub. Refiling: In the event a hubbing partner does not have an agreement with a specific operator, the traffic can be routed through another operator which does have the required contract.
Moreover, Airlines often have an engine leasing agreement between each other so that the engine maintenance schedule can be adhered to at accurate times, saving running costs for both airlines. In a similar manner, a telecom operator can use Interconnect to provide capacity and availability guarantee to another operator through SLAs, leading to reduced investment. Through Interconnect, mobile operators can achieve route optimization (Least cost routing) between a source and a destination. Airlines have something similar called alliance code sharing (e.g. the well-known grouping called Star Alliance) which gives passengers lower prices due to lowered operational costs for a given route, more departure times to choose from, shorter travel times as a result of optimized transfers and more destinations within easy reach. Mobile operators can also use Interconnect services to create new revenue streams among each other through tie-ups with local content providers and content aggregators. It’s not really very different from the airline industry which brings ancillary revenues from non-ticket sources, such as on-board food and services by tie-ups with local and international catering companies and frequent flyer programs by tie-ups with co-branded credit cards.

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