Economies of Scale: the United Empire
How a master arose
We have talked at length about the most successful airlines, and we have briefly touched on the concept of economies of scale as it applies to the aviation industry at large. Let’s dig into that concept more deeply here.
As of 2026, many airlines are capably interlinked on a global scale, most notably through the major alliances: SkyTeam, Oneworld, and the largest alliance, Star Alliance. Low-cost carriers technically have two alliances as well, but they are not worth exploring in detail. These alliances tend to be weaker, less legally binding, and far more transient. Members frequently come and go, as many low-cost “bus” airlines appear, fail, merge, or are absorbed by larger carriers. To this day, no U.S.- or European-based low-cost carriers (LCCs) have joined or formed a true alliance.
Alliances themselves are far too expansive to cover adequately in a single paragraph and rightly deserve their own article. For now, it’s enough to say that alliances allow individual airlines to expand their route networks, establish a global footprint, attract international customers, codeshare with partner airlines, and reduce operational costs and overhead by leveraging shared networks, equipment, and infrastructure.
On their own, however, alliances do not enable profit or revenue sharing.
United Airlines was the first to navigate this limitation—while also overcoming substantial U.S.-specific FAA regulatory hurdles—by entering into deep operational and financial negotiations with German flag carrier Lufthansa. As I briefly noted in my previous article, an unofficial aerial United–Lufthansa “empire” exists. This partnership goes far beyond shared ticket pricing and itineraries; the two airlines share profits, bilingual crews, route networks, and operational standards.
Let’s look at an example.
A Germany-originating traveler—let’s call him Hugo—books an Asia-bound itinerary to Tokyo-Narita (NRT) through Lufthansa. Because of the way Germany’s travel infrastructure operates, Hugo can take a Deutsche Bahn (DB) train from a station (Bahnhof) near his home to the central station (Hauptbahnhof) at Frankfurt Airport (FRA), Berlin Brandenburg (BER), or Munich (MUN). From there, he can seamlessly pass through security and customs to his Lufthansa gate. Lufthansa considers the train segment part of Hugo’s itinerary and assumes responsibility for that portion of the journey.
After arriving in the United States for a transfer—say, in San Francisco—Hugo connects to an onward United flight departing from the same international terminal in which he arrived. The United ticket is printed on a Lufthansa itinerary because, operationally, the two airlines function as one extended entity spanning much of the globe.
From San Francisco, Hugo boards a United 787-9 Dreamliner bound for Tokyo-Narita. Upon arrival, he collects his bags exactly where he left them with the Lufthansa crew the previous morning. Baggage handling is seamless because the Lufthansa–United partnership maintains aligned operational expectations and service standards across staff and crews.
Booking accommodations is equally simple. Both Lufthansa and United offer curated hotel collections for loyalty members, making the transition from air travel to lodging frictionless. As I mentioned in my earlier article on United’s success, within the next ten to fifteen years there may be little meaningful distinction between Lufthansa and United—aside from the technical designation of Germany’s flag carrier.
This is economies of scale in action, achieved through a de facto global empire.
In the next installment, we’ll take a deeper dive into airline alliances. This piece alone has convinced me that the topic deserves its own focused discussion.
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