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.
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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35 comments on “United’s Atlantic Joint Venture Guides How United Grows”
Why isn’t DUB shown as a hub for OneWorld/AA on the first graphic? Isn’t like the third or fourth biggest hub in the EU for flights to the US? A lot of connecting traffic, particularly to/from the UK regions.
Cranky probably didn’t include them because Aer Lingus isn’t actually a Oneworld member, despite being owned by IAG. At the same time, they are in the Atlantic Joint Business JV with American, British, Finnair, and Iberia, so it probably makes sense to include them. The JV is arguably more important than the alliance.
Nafishka – As much as I’d like to say it was a strategic decision… it was just a dumb oversight. Of course, this only further highlights the “western-ness” of AA’s partner hubs. I’ve fixed the images.
Lufthansa have really struggled in recent years, so I imagine they’ve asked UA to minimise any sort of economic damage to their hubs.
This also has a strategic benefit for them, ESPECIALLY if Lufthansa Group can win the fight for Tap Air Portugal.
If this all works out, the network and schedule created would be an absolute monster to compete with.
What nonsense. They have a JV. It’s metal neutral. Doesn’t matter who flies it and TP will end up in the arms of AF/KL, not LH.
Oh please you read the post so you know exactly what I’m talking about. We all know it’s NOT the Lufthansa Group airlines flying EWR-PMI
I’m also talking hypotheticals here. The Portuguese government could very well sell it to AF-KLM, just as they can to LHG or IAG. But if they do get it, they *could create something very valuable.
TP to AF/KL doesn’t seem all that likely to me. Delta and LA are pretty clearly deep in bed together and it only seems a matter of time before AF/KL starts partnering with LA TATL. A TP/LA tie up would seem to have a LOT of antitrust concerns since the two carriers would control such a huge amount of the Portugal>Brazil market.
Frankly, OneWorld/IAG seems a more likely partner now that IB couldn’t get Aer Europa. Aside from sharing a peninsula, the overlap between TP and IB is absolutely zero unless you’re talking about connecting itineraries.
But LH Group is an obvious takeover partner as well. A lot would seem to depend more on who Gol/Azul ultimately partner with (along with AV) in the US if that merger happens. If Gol remained independent as a domestic-only airline, having AA in the US and TP in Europe would be an amazing outcome for them.
@MaxPower, you took the words right out of my mouth!
Remember, LIS is not or could just be a MCLA (Mexico/Caribbean/Latin Americas) gateway, but also an **African** gateway.
Seeing as AF-KLM and LHG control the 3 best hubs (CDG/BRU/AMS) for that, it’s anti-competitive to knock out a potential competitor in IAG.
Less Africa, Middle East expansion is unlikely, no chance of Asia nonstops, builds on pre-existing strength in other markets (crucial for profitability).
The choice (IAG and Oneworld) for the Portugese government is clear.
Either way, TP could be crucial in the fight for European dominance.
I will trade TAP for ITA all day long.
FRA is an absolutely horrific connecting hub, and it only seems to get worse rather than better. I couldn’t believe the minimum connect times they publish considering the distance and poorly designed schengen check stations.
FRA has yet to let me down – I’ve had 20 mins (because of delays) between landing from a TATL flight and boarding a connection, and still made those flights without them holding the departure. I agree they seem to accept stupidly short times, but trying to make those connections with immigration in between at a US or UK airport would never happen.
I think FRA has many faces. If you stay in the A/Z pier it is a surprisingly good airport. Once you got out to B, or heaven forget C it can be a lot more painful. I’d still take it over LHR and AMS every day, but some of that might that people prefer the devil they known.
Well you’ve basically ruled out every major connecting hub in Europe with the exception of CDG, which is not the most connection friendly hub.
I’d say AMS and FRA are better than most, but I guess this depends on your personal experience.
United resumed EWR-PRG for a season, post-pandemic in 2022 but then did not return it since. The riverboat cruise market has shifted to other places like Portugal and France.
Interestingly enough Air Canada is taking over NA to Prague in 2025, but I believe it makes sense. As the cranky flyer already stated their cabins are denser with more economy passengers than United, best served on a Prague route. There’s also clearly a market out of Toronto as Air Transat upped their frequency on the Prague route before AC announced they were returning to the route.
I find Naples quite interesting because Air Canada is joining united in operating out of there. I’m guessing that has less to do with connectivity and more to do with taking advantage of secondary cities’ lack of direct routing to NA.
Really? – I think you’ll find that everything going across the pond (including the beyonds) is in the JV’s not just the Hub to Hub flying – all the revenue is pooled, all the costs are pooled and the proceeds or split by whose metal flew – the goal of the JV is to maximize proceeds but the challenge is not all routes are made equal and an airline could fly a less profitable route but get paid out at the higher average route profitability and visa versa. Like all JV”s it takes a mature approach to make them work, that said there is no doubt that this is way better than the alternative. You can thank NWA/KLM for cracking the code on this, two relatively small airlines in TATL terms punched well above their weight with the first real JV.
Isn’t there also a difference between the DL and UA/AA JVs on profit vs revenue sharing that creates slightly different incentives as well? (DL JVs generally set up with profit sharing vs revenue only for A++)
Neil – I don’t know the internal details of the different agreements.
What would the implications of profit sharing vs revenue sharing be? Profit sharing seems like it would skew towards European carriers with less costs? But not sure about revenue sharing and how that plays out?
Fascinating analysis. Thanks, Cranky!b
I don’t think you can consider Berlin Tegel an exit, since the airport closed and UA now serves Berlin via BER. Yes, there was a gap during Covid, but they were back by 2022.
Also BGO was just a 2022 flight that didn’t work. Wasn’t there in 2018, isn’t there now, just like PRG.
UA’s only real market exits from 2018 are HAM, MAN, and GLA.
Bravenav – Berlin isn’t shown as an exit, it’s in white showing no significant change. I included experiments between 2018 and today that didn’t work just to highlight what has gone well and what hasn’t.
I took the red dot by Berlin to signify an exit. Is that dot for Prague?
That is Prague.
While I recognize FRA, MUC and ZHR get the bulk of the connecting traffic, BRU’s so much easier to connect through. Their two concourse configuration makes it a breeze and I’ve never waited very long for passport control. VIE’s infuriating for westbound trips as they LOVE their 25 minute connections, which don’t seem to always work. And that’s 25 minutes from a hardstand via bus to the terminal. For all the detractors of FRA, at least it’s not CDG.
What this article and its analysis screams out to me is the elephant in the room that nobody wants to mention… namely how deeply anti-competitive these metal neutral joint ventures have become. We now have companies with a free permit to co-ordinate actions with former rivals against free market competition.
American should be opening routes to Spain, Delta should open routes to France outside Paris and United should be opening routes to eastern Europe…. but none of this happens so as to continue the fare-raising oligopoly that these 3 cartels have become.
This is a great overall hub and JV analysis but there is a lot more data that would answer a lot more questions beyond just flights and hub locations. Larger questions include what kinds of goals each JV has including market share by specific region of both the US, Europe and various regions beyond the JV hubs – both in the Americas and Europe and beyond as well as how well each of the JVs achieve those goals.
For instance, UA has a clearly stated goal to serve many more cities but is that really a Star JV goal or one that UA disproportionately develops and also benefits from. It is not a given that all revenue is equally thrown into the hopper for every JV and the contribution is equally shared. Those details aren’t shared but there are terms in the JV agreements that incentivize different goals.
The location of LH Group JV hubs supports a strong presence in Eastern Europe while AF/KL do well in the Middle East and N. Africa. How each of the JVs develop their networks would be interesting to know – but the data to come to conclusions is not readily available.
It repeatedly gets discussed but it would be helpful to know what percentage of each of the flights operated by the JV participants on a combined basis are to/from a JV hub on only one end (such as DL hub to ATH) vs. JV hub to hub (such as NYC to LHR for AA/BA) or even non-hub to non-hub.
AA relies heavily on LHR which is a huge local market and where BA is much larger even over the Atlantic than DL is relative to AF/KL in their hubs to N. America or UA is relative to LH Group TATL size from JV partner hubs. DL’s position as the consistently most profitable transatlantic player leads it to not pursue some opportunities even at the expense of fewer cities served from the US. Airlines build their networks around the goals they seek.
Narrowbodies are clearly playing a larger and larger role in TATL travel and DUB’s position in Europe is giving the AA/BA/EI etc JV some clear advantages. UA is likely to use the A321XLR to add more “dots” while AA will likely use them to find the right level of service to cities that DL and UA will probably serve with widebodies. DL and the SkyTeam JV don’t appear very interested in narrowbodies other than SK (as it becomes part of the JV) so it will be interesting to see if the increased revenue for a relatively few narrowbody-only destinations moves the needle in total JV size and ultimately profitability.
For now, it is fair to say that UA is offsetting LH Group’s more easterly hubs in continental Europe with more narrowbody flying. AA/BA/EI will have some narrowbodies both to optimize gauge esp. in the winter but also to maintain BA/EI’s position as having the largest number of US gateways while AF/DL/KL will serve large markets in both the Americas and Europe but almost exclusively on widebodies.
We’ve repeatedly been told at the Widget that KLM/AF (especially AF) is reluctant to put their code on any narrow body trans Atlantic flying with the exception of Iceland. Thus the switch to 767 from 757 on PIT-CDG, RDU-CDG etc…. They really push back at any narrow body TA flying.
Delta’s objections to narrowbody transatlantic flights, according to them, is because they believe that the cost of a 3rd pilot on flights above 8 hours or even if there is a need to staff w/ a 3rd pilot if they are close to that time limit makes the economics of an augmented narrowbody flight not economical. Since narrowbody premium configured aircraft carry about half of the number of passengers that can be carried on an A330/789 size aircraft but pilot costs are not half of a widebody, their logic might be valid. Add in that narrowbodies cruise slower than widebodies – even the 767 – and airlines pay a “penalty” in pilot costs which is particularly relevant given US carrier labor costs which are significantly higher than low cost carriers. DL has another 4 years or so for 763 TATL flights and then the 764s are probably winding down a decade from now and both could serve small and seasonal markets with just as much profit potential as narrowbodies.
It is noteworthy that EI has a less premium configuration and about 180 seats on their A321s for transatlantic use so the economics could be more favorable -and I would bet their pilot costs are lower.
Since the VS JV gives DL as much access to the UK as DL needs, DL is fairly strong in Ireland and in continental Europe, and AMS/CDG have favorable geography for connecting to Europe, I’m not sure that DL will be missing much.
The real benefit for UA is secondary cities that are west of LH JV hubs and the real question is whether UA really gains that much more esp. w/ profits.
I expect AA and UA will use their A321XLRs quite differently so it will be very interesting to see how it works for all 3 of the US carriers and their JVs but think the biggest difference will be in the number. of cities served in the US rather than a big difference in share in western Europe
Maybe I’m being a bit shallow in my analysis (and maybe a bit facetious), but it seems to me that most airlines network strategy tends to be based on the same three factors that determine the value of real estate – location, location, location.
Would love your take on the economics of United routes to ME/Africa that DO overfly LH hubs, like their route to Jordan or north Africa. I’m not sure how these factor into the JV (would they be considered JV flights if they connected thru FRA or BRU?) but this is an area that UA has been more aggressive in pursuing compared to their American competitors.
Though maybe these flights (esp for ME) are really taking a bite out of the ME3 and TK rather than the LH jv….
Overflying into ME? – I think there are a lot of things to consider here and yes, these would be joint venture markets. In the Middle East, it’s a long way to fly from those European hubs on a domestic-style aircraft.
On top of that, Tel Aviv, for example, I think is a unique case. There is so much security involved and so many other airlines flying nonstop from the US that it would be a mistake not to fly that.
But look at Amman. In Q2 2019, Lufthansa and United took around 60 passengers per day. But in Q2 2013 after the flight started, they were up to about 155 per day. Royal Jordanian is number one in both cases. It’s all been good for United and partners.
And of course, the Dubai flights are part of the partnership with Emirates.
As for North Africa, the only airport United serves there is Marrakech.
That’s a huge backtrack from those European hubs, but also it’s a winter market so United can find a place to put a widebody when it’s tough to find spots.
I question the usefulness of looking at surplus miles to determine the quality of a particular routing. A convenient connection is a major factor. Madrid is a good spot to transfer to Bilbao bc of flight variety and times, not because of the low circuity.
Directness (if that is a word) does help to make a routing more marketable….to an extent. Flying Chicago to Sevilla via FRA is a LOT less attractive than via MAD (which is also a bit of an overflight). Not to mention that FRA has a poor reputation as a connecting hub. That’s why UA has invested in building up nonstops to western Europe from the USA, which is a more attractive option. OTOH, central Europe, the Balkans, etc (a region emerging as a popular vacation spot) is a lot easier to access via UA and partners than on the competition.