IRONY AND INTERNATIONAL
In the wee hours of Tuesday morning, a note from #TheAirCurrent was dropped in my email box that hinted that #unitedairlines and #emiratesairlines were plotting a codeshare agreement. You just cannot read that headline without reflecting on the battle waged between the Big 3, its organized labor, and the Gulf Carriers in 2015.
Labor's concern was that jobs would be lost to government subsidized airlines in the Gulf - Emirates, Qatar, and Etihad. The direct concern was that jobs would be lost as the three Gulf Carriers added more points in the US. The indirect concern was that Open Skies agreements in the EU would negatively impact the alliance structure resulting in the need for less transoceanic flying as connecting traffic would be lost from important points like India.
The economic case to assess the damage to the US carriers was not easy. The case was especially difficult assessing damage coming from the Gulf Carriers and 3rd and 4th freedom rights they possessed enabling them to fly between the Gulf and the US.
Simply, there was not a long list of US gateways with sufficient local traffic to economically support flying very large airplanes to the Gulf and connecting a myriad of passengers onward to points in India, and Southeast Asia. Economically was the issue. The belief was that government subsidies were being used to paper over the losses.
However, where the economic damage case became clearer was the Gulf Carrier's ability to take advantage of their 5th freedom rights and fly, for example, between Dubai and Italy then onto the US. The fifth freedom rights allow the airline to sell tickets from Dubai to Italy, Dubai to the US, AND between Italy and the US. This could strike at the heart of alliance structures.
FINALLY, IRONY AND INTERNATIONAL
If United and Emirates join hands in some fashion, a formal announcement might come by mid-September. The IRONY is that news first found its way into the ether the week before Labor Day. After all, it was organized labor joining with management teams in 2015 to make this an issue. Understatement.
As for the INTERNATIONAL piece, this is the arena where opportunities can likely be found. More and more point-to-point flying being done in the US domestic market only results in less connecting traffic over time. The opportunities for growing the Big 3 are not at home.
In late 2020 I wrote that a generational opportunity is present for management and labor to extinguish vestiges impeding commercial opportunities (read international) over the coming few years. A first movers advantage is available. I still believe that there could be growth opportunities for US carriers if not for ownership limits and labor concerns.
Along with the hint in The Air Current that there is something afoot with United and Emirates, there are also hints of a potential large widebody order out there from United as well. Hmmm...
A regret for me is getting involved in that spat.
#swelbar