While I have no inside information suggesting that this will happen, I can’t help but point out how overdue it is for Delta Air Lines and Etihad Airways to launch a partnership with one another. I mentioned this in passing the other day when discussing the new joint venture between Etihad and China Eastern, but wanted to talk about it in more detail in this post.
Current US & Gulf carrier dynamics
It’s interesting to see how the relationships are evolving between the “big three” US carriers and the “big three” Gulf carriers. Going back a decade, the major US carriers were trying to block the major Gulf carriers from growing in the United States, arguing that they provided unfair competition, and were putting US jobs at risk.
However, in the meantime, they’ve taken more of the approach of “if you can’t beat ’em, join ’em.” When you look at the current situation:
- American and Qatar Airways have a strategic alliance, American flies to Doha, and both airlines also belong to the oneworld alliance
- United and Emirates have a strategic alliance, and United flies to Dubai
- American also has a partnership with Etihad, but Etihad is definitely the second tier partner, so doesn’t have as much upside as Qatar Airways does
As you can see, on the US side, American and United are in a good position with these partnerships, while on the Gulf side, Qatar Airways and Emirates have good arrangements. If you ask me, there’s a glaringly obvious development that we should see…
Why Delta & Etihad would be a good fit
Delta is of course an incredibly profitable and strategic airline, yet I’d argue that Delta needs Etihad more than the other way around. When you look at Delta’s long haul network, the airline is very invested in its joint ventures and equity partners.
Delta’s two most important commercial relationships are the transatlantic joint venture (with Air France-KLM and Virgin Atlantic), as well as the transpacific joint venture (with Korean Air).
Arguably the biggest gap in Delta’s long haul network is the Indian subcontinent. Go to Delta’s website and try to book a ticket from Boston (BOS) to major cities in India, like Ahmedabad (AMD), Chennai (MAA), Hyderabad (HYD), Kolkata (CCU), etc. Or try to book tickets to destinations like Dhaka (DAC). The website will tell you there are no available flights. This is a major hole in Delta’s network, compared to American and United:
- American has a partnership with Qatar Airways and Etihad for connectivity in the Middle East, and also flies to India, and has a partnership with IndiGo, which is India’s largest airline
- United has a partnership with Emirates for connectivity in the Middle East, and also flies to India, and has a partnership with Air India
Meanwhile Delta has none of that:
- Delta and Saudia both belong to SkyTeam, but Delta doesn’t at all push its passengers on Saudia, and on top of that, it’s not an airline that many Delta flyers want to travel with (it’s not a good fit — have you seen how much people drink in Sky Clubs?!)
- Delta doesn’t have any airline partners in India
- Delta doesn’t fly to India; while the airline was going to fly to Mumbai (BOM), that’s no longer practical, due to Russian airspace closures
- While Delta’s partnerships with Air France-KLM and Virgin Atlantic offer connectivity to India’s few biggest markets, that’s about the extent of it
- Even if Delta did fly to India, it’s not clear which airline Delta could partner with for connectivity there
It seems like Delta’s best solution to add coverage in the region would be to launch a partnership with Etihad, and maybe to even add a flight to Abu Dhabi (AUH), perhaps from Atlanta (ATL) or Detroit (DTW). Then Etihad could provide connectivity to so many destinations that are currently gaps in Delta’s network.
What’s the upside to Etihad for dumping American and partnering with Delta?
- Arguably Etihad’s US route network is much more complementary to Delta’s; Etihad flies out of T4 in New York (JFK), which is also Delta’s terminal, and even has US Pre-Clearance, so it would make connections so easy, and Etihad has also launched flights to Boston (BOS), which is another Delta hub
- Etihad has second class status with American, as American primarily tries to route passengers its own flights or onto Qatar Airways flights
- Nowadays Etihad seems to send more connecting passengers on JetBlue, but the airline doesn’t have a premium cabin on all flights, so isn’t necessarily great for connectivity
- Partnering with Delta could open up logical new US destinations for Etihad; I could see Etihad flying to Atlanta or Detroit, with the former being the ideal connecting point for a larger portion of the country, and with Detroit having a large population from the regions where Etihad is the strongest
Let me say of course that selfishly I’d hate to see this, since I love redeeming AAdvantage miles on Etihad, and there’s no way Delta SkyMiles would offer good value when redeeming on Etihad. But I’m also trying to separate my general thoughts on commercial partnerships from my desire for certain award redemptions.
Would the economics of this make sense?
I imagine one of the reasons that Delta has been hesitant to launch a partnership with Etihad is because Delta is very focused on launching partnerships that are part of joint ventures, and/or with equity partners.
I wouldn’t necessarily expect Delta and Etihad to launch a joint venture (since it would partly cannibalize the existing transatlantic joint venture), and I also wouldn’t expect Delta to invest in Etihad (despite Etihad executives inferring the airline is considering an IPO).
However, if you ask me, this partnership is more out of necessity of having global access, and serving one of the world’s largest regions. It’s not unlike how Delta has launched a partnership with EL AL, even though it’s fairly casual as of now, as there’s no joint venture, and Delta hasn’t invested in EL AL.
Could Etihad join the SkyTeam alliance as well?
Perhaps the next logical question is if it would make sense for Etihad to join the SkyTeam alliance. There’s a bigger trend going on here. Etihad is increasingly cooperating with SkyTeam airlines — Air France-KLM has a close partnership with Etihad, and China Eastern and Etihad are launching a joint venture.
If Etihad and Delta were to launch a partnership, would it make sense for Etihad to also join the SkyTeam alliance?
Personally I could see it happening, though I wouldn’t consider it to be a sure bet. I do think global alliances are deemphasized a bit nowadays, given how many members some of the alliances have. Many airlines are instead focused on individual, strategic partnerships, so it could make sense for Etihad to continue to do that, without committing to an alliance.
Personally I think the most likely outcome is that Delta and Etihad first launch a partnership, and then maybe in the future Etihad joins SkyTeam… or maybe not.
Bottom line
While there’s no indication that this will happen, I think there’s merit to Delta and Etihad launching a partnership. Delta desperately needs a partner providing access to the Indian subcontinent, while Etihad could use a stronger full service partner in the United States. It’s just wild to me how many cities there are with 5-10 million people, where delta.com returns an error message when you try to find an itinerary…
What do you think — could we see a Delta and Etihad partnership?
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