Tiny German airline a big player, thanks to interline deals

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Hahn Air has a fleet of just three Cessna aircraft, but more than 300 interline partners.

Germany-based Hahn Air just might be the biggest airline that barely flies. Or, depending on one's perspective, the smallest foreign carrier widely known among U.S. travel agents. 

"Our service is to enable travel agencies to sell what they usually would not be able to sell," said Jorg Troester, Hahn's head of corporate strategy, industry and government affairs.

Now in its 20th year, Hahn owns just three aircraft, all Cessna business jets with capacities of no more than eight passengers. This summer, the tiny carrier is using those planes for luxury charter operations and to fly twice weekly between Dusseldorf and Luxembourg and weekly between Dusseldorf and Palma de Mallorca, Spain.

But flight operations aren't really why Hahn Air has those aircraft. Instead, the company has used its status as a tiny carrier to acquire memberships in IATA, ARC and other business and settlement plan (BSP) organizations around the world.

Those memberships, in turn, enable Hahn Air to operate in its unique market niche of connecting travel agencies in various regions of the world, through their GDSs, with small, far-flung airlines elsewhere. 

For the U.S. market, that means connecting agencies with airlines that don't have the resources to develop their own distribution network in North America. Such airlines often either aren't in a GDS at all or aren't in the full suite of the three GDSs used by U.S. agencies. They also are sometimes not members of ARC.

"If you are an agent, you should love this," said Brett Snyder, an aviation analyst and owner of the air travel service Cranky Concierge. "It allows you to find and book places that are halfway around the world really easily."

So, how does Hahn connect agencies with obscure airlines such as, for example, Air Tanzania, Lao Airlines or Cambodia's Lanmai? The answer is through interline agreements. Hahn said it has more than 350 interline deals, mostly with airlines but also with train and shuttle services as well as the ferry line Buquebus, which operates between Buenos Aires and Uruguay. 

Unlike the standard conception of an interline ticket, however, Hahn doesn't operate any portion of the itineraries it sells. Instead, it sells flights operated solely by interline partners, but on Hahn Air ticket stock. Then, Hahn, as the ticketing airline of record, handles settlement with ARC or a relevant BSP elsewhere in the world.

Later in the process, Hahn remits payment directly to the operating carrier for the ticketed flight, taking a fee per the terms of that particular interline agreement. As such, travel advisors' clients don't shoulder extra costs. 

Troester cited South African discount carrier FlySafair as an example of an airline for which U.S. agencies might use Hahn ticket stock. FlySafair has 74 daily flights and services between seven South African airports with a base in Johannesburg, but it's not an ARC member. 

For travel advisors and clients who might be concerned about doing business with little-known carriers, including ones that aren't among ARC's 240 member airlines, all ticket sales on Hahn Air stock come with free insolvency insurance. Hahn Air also supports Electronic Miscellaneous Documents (EMDs), enabling its interline partners to sell ancillaries through the GDSs. 

According to ARC, Hahn's unusual business model has been successful. The company joined ARC in 2002, and since 2007 it has seen steady year-over-year growth, though numbers so far this year are slightly down. That growth has come even as ARC's membership has grown to its current 240 airlines from 169 in 2007, in the process limiting the use case for the Hahn model. 

Hahn has also attracted competitors in the U.S. and other markets. Denmark-based Flexflight joined ARC in 2012, offering a similar ticketing model. France-based APG Airlines joined ARC in 2016. 

ARC senior airline participation manager Gena Crowe said APG, especially, is making in-roads in the market, though Hahn remains the clear leader.

"Hahn is kind of the mother of this business model," she said. 

Troester said Hahn has issued more than 35 million tickets since 2010. But it's not resting on its laurels. This year the company has thus far added 21 interline partners. 

"We are very close with our airlines, we are very close with our markets," Troester said. "We are looking very closely at what is happening out there. We always try to find new solutions to help travel agencies."

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