US Airways exited Star Alliance and joined OneWorld yesterday completing another stage of the merger plans just 24 hours before Delta and Virgin Atlantic began flying their new joint schedule. The impact of these two separate moves will be felt on the Transatlantic market for many years to come and it will be most interesting to see the impact over coming years. The downside of all this will be felt keenly by United Continental and Lufthansa who have lost the US Airways connectivity and gained a powerful competitor all at once at a time when Delta and Virgin will up their game with nine daily flights between the New York and London from three and of course all the while the Middle East majors ramp-up their US operations through 2014.
So we could consider this period as one of uncertainty for much of the US international market. The loss of US Airways connectivity on United's transpacific business will be of interest as this is one area where United enjoys a substantial lead over Delta and American in terms of APAC connectivity, but as US moves into OneWorld this advantage is chipped away, even so United has a great lead to overcome in the Chinese market and it is here where United will have to try and keep margins up.
While we are looking at airline mergers and partnerships, it is worth noting that Emirates has won big on the Qantas tie-up 12 months ago as Dubai Internal records that Australasia was the fastest-growing market for passenger traffic, increasing by 30.5% on the back of the tie-up. Emirates has already leveraged its relationship with Qantas to expand its market share in the APAC region. In February it signed a codeshare agreement with Jetstar, giving access to 27 new routes. The worry for Emirates is that as Qantas declines an investor will come to the rescue that might wish to realign partnerships. Maybe Emirates will need to make a bid for a share of Qantas before long.