It had been known for weeks, but last Wednesday, United and Emirates officially announced that they would become partners. This is a smart move, and it’s one that will benefit both sides. The only losers are likely Delta and to a lesser extent, JetBlue. But it would appear that the game of musical chairs is now largely over and most of the airlines that care have found their dance partners.
The reason this partnership is making such news is, of course, because United — along with Delta and American — have spent years railing against the so-called ME3 (Emirates, Etihad, and Qatar) for being hugely subsidized and creating a situation with unfair competition.
When that argument rolled out back in 2015, I was very wishy washy on the issue. Sure, these carriers were hugely subsidized, but if that’s what their home countries want to do in order to benefit the country at large, well, fine. My only firm objection was to the idea of these airlines being subsidized to fly fifth freedom routes, like Emirates flying Newark – Athens – Dubai or JFK – Milan – Dubai. But those have remained few and far between and are effectively a non-issue at this point.
In this fight, it seemed like there were varying degrees of commitment. Delta was very clearly spear-heading this effort, and American and United seemed more content to just come along for the ride. If Delta wanted to do something that would benefit the competitive position of American and United, well, they wouldn’t have a problem signing their names to it. That resulted in existing partnerships being scaled back, removing codeshares and the like. But it wasn’t going to stay that way for long once the economics became clear.
Soon enough, beliefs changed. Airlines slowly but surely started to accept the fact that these airlines weren’t going anywhere, and in fact, they could be a real asset. Nobody figured this out sooner than Willie Walsh, who sold a stake in IAG (parent of BA, Iberia, and others) to Qatar Airways in 2015 and started a deep partnership right about the time when the US carriers were ramping up their fight. Qatar had already joined oneworld in 2013 and saw the value of pumping partner traffic to help prop up its overbuilt network. IAG looked at that network and saw opportunity.
It seemed obvious that American would be the first to fall in the US thanks to its close ties with IAG and its membership in oneworld. In 2020, American and Qatar announced a “strategic partnership” that would ramp up codesharing and included the launch of a flight from JFK to Doha operated by American. This created an incredible number of options to take travelers beyond Doha into Africa, the Middle East, and South Asia… places where American had a limited or non-existent presence previously.
Looking at ARC/BSP data in Cirium, American and Qatar sent about 500 people connecting between the airlines per day this past June. This is still a fairly young partnership and there is no joint venture. There is room to grow.
Sitting on the sidelines, United had to start feeling like this was a futile fight. It already had a relationship with Turkish as a fellow Star Alliance member. When fellow partner Air Canada started signing up deals with Etihad and Emirates, United must have felt empowered to break ranks with its partner Lufthansa Group which has a remarkable disdain for the ME3, the complete opposite of IAG.
Now, United has embraced Emirates, the biggest fish in the ME3 pond. This feels a lot like American’s relationship with Qatar to start. United will begin flying Newark to Dubai with a 276-seat 777-200ER in order to help feed connections beyond. South Asia has to be the biggest target, but there are others as well that will benefit from this level of connectivity.
Emirates will begin pouring traffic into United primarily at Chicago/O’Hare, San Francisco, and Washington/Dulles. Previously, Emirates had relied on Alaska in Seattle and JetBlue mostly in Boston and New York to provide that feed. Emirates had already lost Alaska when that airline joined oneworld and tied up more closely with Qatar. Now, with what I assume was a United requirement, Emirates will break up with JetBlue.
Losing Emirates isn’t great for JetBlue, but it’s not devastating either. It can pick up some traffic through a growing partnership with Etihad, but in the end it’s probably not overly significant for the airline.
On the other hand, the gain for Emirates is enormous because it didn’t even have an interline agreement with United for basic cooperation before. Now it will have that not only in those three primary hubs where there will be codesharing but also anywhere else in the system where there could be connecting opportunities. This gives Emirates much better access to the US market.
This leaves Delta as the last man standing. Even if it has a change of heart and decides it wants to partner with a Middle East carrier, who will it be? It most certainly won’t be Qatar or Emirates. I suppose it could potentially woo Etihad away from its limited agreement with American and the JetBlue pact, but Etihad is a shadow of its former self.
In March 2017, Etihad had over 2 million seats scheduled to 89 destinations. Next March it currently sits at 1.25 million seats to 63 destinations. If you’re curious to compare, Emirates is at 5.37 million to 132 destinations next March while Qatar sits at 3.68 million to 155 destinations. There really is no comparison. And even more pointedly, take a look at India which is a key part of this deal.
ME3 India Departing Seats and Origin Airports – March 2023
Etihad just can’t provide the same kind of benefit to a US airline that the others can. On top of that, Etihad is the least viable of all the airlines and the most in need of the subsidy that Delta has so publicly opposed.
Maybe Delta can instead wait for the launch of Saudi mega-carrier RIA which will, if it launches, require subsidies presumably beyond anything we’ve seen yet since it will serve a city that doesn’t even exist yet. Or maybe Delta will stubbornly stick to its position and try to find other ways to serve the places it can’t serve well on its own.
Regardless of what Delta does, this is a good move for United and it’s a good move for Emirates. It was only a matter of time until these pieces started falling into place.
