The challenge

A Tier 1 ANZ airline was losing margin through a complex web of legacy partnership agreements—codeshares, interlines, and distribution deals negotiated over decades without a coherent commercial framework.

Revenue attribution was opaque. Cost-to-serve was untracked. And the airline was subsidising partner traffic that generated minimal net contribution.

"We were flying full planes but bleeding margin on every partnership seat."

— VP Commercial Strategy

Our approach

We started with a forensic commercial audit—mapping every partnership agreement, quantifying net revenue contribution, and modelling cost-to-serve across distribution channels.

The data revealed three critical insights:

  • 40% of partnership revenue came from just 12% of agreements
  • Legacy interline deals were operating at negative margin due to misaligned pricing and revenue share terms
  • Distribution channel costs were cannibalising yield on high-value routes

What we delivered

We redesigned the airline's partnership strategy from the ground up:

  • Commercial framework redesign: Implemented a tiered partnership model with clear margin thresholds and performance triggers
  • Renegotiation roadmap: Prioritised 18 high-value agreements for renegotiation with data-backed commercial terms
  • Distribution optimisation: Shifted high-margin routes to direct and preferred channels, reducing cost-to-serve by 22%
  • Performance dashboards: Built real-time margin tracking by partner, route, and channel

Outcomes

Within 18 months:

  • $12M in annual EBIT improvement through renegotiated terms and channel optimisation
  • Partner portfolio reduced by 30% with zero impact on network coverage
  • Distribution costs reduced by 22% on priority routes
  • Commercial transparency across all partnership agreements

The lesson: partnership strategy isn't about maximising deals—it's about maximising value per deal. In a margin-constrained industry, precision matters more than scale.