It had been known for weeks, but last Wednesday the United States and Emirates officially announced that they would become partners. It’s a smart move that will benefit both sides. The only losers are likely Delta and, to a lesser extent, JetBlue. But it seems the musical chairs game is largely over now and most airlines that care have found their dancing partners.
Of course, the reason this partnership is making such news is because United – along with Delta and American – have railed against the so-called ME3 (Emirates, Etihad and Qatar) for years for being hugely subsidized and creating a situation of injustice Contest.
When this argument came up in 2015, I was very wishy-washy on the issue. Sure, these airlines have been hugely subsidized, but if that’s what their home countries want to do to benefit the country at large, fine. My only strong objection was the idea of these airlines being subsidized to fly fifth freedom routes like Emirates which flies Newark – Athens – Dubai or JFK – Milan – Dubai. But these have remained rare and are practically not an issue at this point.
In this fight, it seemed like there was a varying level of commitment. Delta was clearly at the forefront of that effort, and American and United seemed happier just riding along. If Delta wanted to do something that would benefit American and United’s competitive position, then they would have no problem signing their names. This resulted in existing partnerships being scaled back, codeshares and the like being removed. But it was not to remain so for long once the economics were clear.
Beliefs soon changed. Airlines slowly but surely began to accept that these airlines were going nowhere and in fact they could be a real asset. No one found this out sooner than Willie Walsh, who sold a stake in IAG (parent company of BA, Iberia and others) to Qatar Airways in 2015, forging a deep partnership just as US airlines stepped up their fight. Qatar had joined oneworld in 2013 and recognized the value of pumping up partner traffic to support its overbuilt network. IAG looked at this network and saw opportunities.
It seemed obvious that American, thanks to its close ties to IAG and its oneworld membership, would be the first to fall in the US. In 2020, American and Qatar announced a “strategic partnership” that would step up codeshare and include the launch of an American-operated flight from JFK to Doha. This created an incredible number of options to take travelers beyond Doha to Africa, the Middle East and South Asia…places where Americans previously had a limited or non-existent presence.
Looking at ARC/BSP data in Cirium, American and Qatar sent about 500 people transferring between airlines per day last June. It is still a fairly young partnership and there is no joint venture. There is room to grow.
Sitting on the touchline, United must have felt this was a futile battle. It already had a relationship with Turkey as a member of Star Alliance. When partner Air Canada began signing 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 Emirates has embraced the biggest fish in the ME3 pond. That feels a lot like America’s relationship with Qatar to begin with. United will fly a 276-seat 777-200ER from Newark to Dubai to serve connections beyond. South Asia has to be the biggest destination, but there are others who will benefit from this level of connectivity.
Emirates will begin routing traffic to United primarily in Chicago/O’Hare, San Francisco and Washington/Dulles. Previously, Emirates had relied on Alaska in Seattle and JetBlue primarily in Boston and New York to provide this feed. Emirates had already lost Alaska when that airline joined oneworld and became more closely associated with Qatar. Now, with what I assume is a United requirement, Emirates will break up with JetBlue.
The loss of Emirates isn’t good for JetBlue, but it’s not devastating either. It may pick up some traffic through a growing partnership with Etihad, but in the end it’s probably not overly important to the airline.
On the other hand, the win for Emirates is huge because previously there was not even an interline agreement with United for a basic cooperation. Now this will not only be in the three primary hubs where there will be codesharing, but everywhere else in the system where there might be connectivity. This gives Emirates much better access to the US market.
This leaves Delta as the last man standing. Even if they have a change of heart and decide they want to work with a Middle Eastern airline, who will it be? It will most definitely not be Qatar or Emirates. I suppose it could potentially sway Etihad from its limited arrangement with American and the JetBlue deal, but Etihad is a shadow of itself.
As of March 2017, Etihad had planned over 2 million seats across 89 destinations. Coming in March, it currently has 1.25 million seats to 63 destinations. If you’re curious to compare, next March Emirates is at 5.37 million over 132 destinations, while Qatar is at 3.68 million over 155 destinations. There really is no comparison. And even more clearly, take a look at India, which is a key element of this agreement.
ME3 India departure seats and origin airports – March 2023
Etihad just can’t offer one US airline the same benefits as the others. Additionally, Etihad is the least profitable of all airlines and most in need of the subsidies Delta has so publicly opposed.
Perhaps Delta can instead wait for the launch of Saudi mega-carrier RIA, which when it launches will require subsidies likely to exceed anything we’ve seen so far, given that it’ll be serving a city that doesn’t even exist yet. Or maybe Delta will doggedly hold 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, it’s a good move for United and a good move for Emirates. It was only a matter of time before these pieces fell together.
