United’s Atlantic Joint Venture Guides How United Grows

I’m well aware that I’ve written a lot about United’s recent network announcement, but there’s still more to be said. Today, I want to talk about the airline’s Atlantic Plus-Plus (A++) joint venture and why it has created some really unique opportunities that American and Delta can’t as easily access.

In its current form, the A++ joint venture includes United and Air Canada on this side of the Pond along with Lufthansa Group airlines on the other side. That’s Lufthansa, SWISS, Austrian, Brussels, Eurowings, and whatever new, unnecessary airline Lufthansa decides to invent this week. This is a revenue sharing agreement similar to what Delta has with Air France-KLM and Virgin Atlantic as well as what American has with IAG (British Airways, Iberia, Aer Lingus) and Finnair.

Since they share revenue, there is obviously some real territoriality here. The airlines need to keep a balance of capacity, and they naturally wouldn’t like it much when another partner overflies a hub, taking away potential connectivity that they could have put on their own airplanes.

All of that is just standard for all the joint ventures, but the hub geographies really differ between the three.

^{United (dark blue), American (light blue), Delta (red) partner hub locations with smaller circles being less important}

As the map above shows, American’s partners by far have the westernmost hubs in Europe, and that is great for connectivity. But it also means that for American to overfly a hub with its own nonstop from the US, it needs to have a big market or one with a very good reason. Delta’s hubs are somewhat further east (London barely counts as a connecting hub since Virgin Atlantic has nothing into Europe), but they’re still very well-connected to places like Spain. Then there’s United which is much further east.

For United, the primary connecting hubs from the US are Frankfurt, Munich, and Zurich. Austrian has some flights to Vienna, which is even further east, while Brussels Airlines is nearly useless with flights from only New York/JFK and Washington/Dulles. United adds Chicago/O’Hare and Newark to Brussels, but connections from those cities are generally better through other hubs. Brussels is most useful as a connecting point for African travel.

What this means is that it’s a lot harder for United to get Americans to places like Spain and Portugal on its partner without serious backtracking. Just take a look at New York to Bilbao, one of the new United cities, for example.

% of Miles Over Nonstop from New York to Bilbao via Connecting Hubs

Unsurprisingly, American’s hubs are best, followed by Delta’s, and then United’s are far behind.

What’s interesting about this is that United and Lufthansa Group still take some share of passengers. Whether that’s due to loyalty or availability, I don’t know. But with such a large backtrack, United and partners must be leaving something on the table.

Exactly what are they leaving? Well, we can look at Mallorca as an example. United entered the market in summer 2022, so let’s compare how 2024 looks compared to 2019.

July 2024 vs July 2019 US – Mallorca Daily Passengers Each Way

^{ARC/BSP data via Cirium}

United not only grew its share from about a third to about half, but it did so by massively growing the market and cutting into American’s share as a nice added bonus.

This dynamic explains a lot of United’s growth since the pandemic. Take a look at this:

If we look at how Europeans markets have changed since 2018 for United, you can see it’s the southwest where the real growth has been. And which markets have gone or stayed steady? It’s those which are north and east.

United really doesn’t try much to the east of Lufthansa Group hubs, but in 2019 it did try Prague. That lasted one season and has not made a return. With frequent and good connections via all of Lufthansa’s hubs, United doesn’t need to serve those places. It has a lot more to gain in the south and southwest.

I know what you’re thinking. Going to the Iberian Peninsula may be out of the way, but the same can’t be said for Italy and southeast, right? That is true if you look at the map, but flight times are an issue.

If we look at July 2024 departures on the joint venture partners from Dubrovnik to Lufthansa Group hubs, there was a once weekly Eurowings flight to Frankfurt that arrived at 9:55am along with a once weekly Austrian flight to Vienna that arrived at 11am. Nothing else on a joint venture partner arrived before noon, and that makes it really hard to get back to the US.

Sure, cities like Athens and Rome have plentiful flights all day, but those are really big markets where nonstops to the US make sense. Naples and Palermo have ok connectivity, so those may be more questionable in the eyes of the joint venture, but the bulk of the new flying is further west anyway, and that’s where United hopes it and its partners can keep striking gold.

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Did you miss last week’s The Air Show podcast? If so and you found this article of interest, then you’ll want to go back and have a listen. Brian and I talked about United’s big network announcement… both in detail and from a high level. Subscribe now to learn when new episodes are published.

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