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How do the airlines manage the costs invovled in a codeshare?

As all airlines are selling tickets, (might be at different prices) but only one of them is operating the flight. So, how do the airlines decide who will pay how much for the crew, fuel and catering and who will earn what?

And how do you justify:

When an airline sacrifices its capacity to other airlines as a code share partner, its operational cost will generally be reduced to nil. (Source:Wikipedia)

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    $\begingroup$ Possible Duplicate: Why do multiple planes arrive from the same airport at the same time? $\endgroup$
    – Farhan
    Commented Jul 6, 2015 at 14:53
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    $\begingroup$ Short answer: multiple airlines don't operate the flight. One airline operates the flights and the others just have an agreement to market tickets for it. Operationally (callsigns and crew included,) it will be no different from any other flight on the operating carrier. How the revenue is shared probably isn't on topic here and usually isn't made public anyway. For more info, see the question in Farhan's link. $\endgroup$
    – reirab
    Commented Jul 6, 2015 at 15:00
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    $\begingroup$ The good question is how they work out the costs from shared routes. If you were to book the flights separately they would almost certainly be more expensive when you add them up. Do airlines agree a lower cost to complete their leg of the journey? How do they work it out I wonder. $\endgroup$
    – Paul Redmond
    Commented Jul 6, 2015 at 15:08
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    $\begingroup$ Do you mean codeshare? (en.wikipedia.org/wiki/Codeshare_agreement) $\endgroup$
    – Him
    Commented Jul 6, 2015 at 16:33
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    $\begingroup$ I wouldn't necessary believe a quote from wikipedia. $\endgroup$
    – Federico
    Commented Jul 6, 2015 at 17:36

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As the wikipedia article clearly states, there are several types of Codeshare Agreements :

Block space codeshare: A commercial (marketing) airline purchases a fixed number of seats from the administrating (operating/prime) carrier. A fixed price is typically paid, and the seats are kept away from the Administrating carrier's own inventory. The marketing airline decides on their own which booking classes the seats are sold in (the block of seats are optimised just like another aircraft cabin).

Free flow codeshare: The airlines' inventory and reservation systems communicate in real-time by messaging, commonly IATA AIRIMP/PADIS messaging (TTY and EDIFACT). A booking class mapping is defined between the airlines. No seats are locked to any of the airlines, and any airline can sell any number of seats.

Capped free flow: Basically the same as above, but a capping (max number of seats) are defined for each of the marketing airlines participating in the codeshare with the Administrating (operating/prime) carrier.

In these cases, profitability of the Airline Marketing the other airline's tickets is possible in any of the following ways:

  1. There might be an agreement with the Carrier Airlines where the Marketing Airline gets to sell the tickets at the same rate as being sold by the Carrier Airline,but the Carrier Airline sells the tickets to the Marketing Airline at lower prices. This helps the Marketing Airline to generate revenue and improve its indicated (apparent) frequency on the given route. The Carrier Airline is benefited in a way where its tickets are sold on more than one portals, so better visibility (Marketing) and hence the name.

  2. Now a days alliances like OneWorld are being formed, where multiple carriers come together and form codeshare bases to mutually benefit each other.

  3. The Marketing Airline might even sell the tickets at a cheaper price than the original Carrier Airline, just to establish its base in the route before starting its operations, so that when it starts its operations, people already know about it. hence, without deploying planes for the route, it can already have an established consumer base.

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