As 07JeepXK said, it is the diff breather tube. So that would mean it connects to the front diff.
I think it would be smart for him to confirm it, by tracing the tube down to its source.
It doesn't sound like he has serviced the front axle anytime recently, and it makes me wonder what would cause oil to come up that breather tube and start to leak.
Could be a bad valve on the end of it, maybe water got into the front axle and now its fluid level is high?
Done any 4 wheeling lately, driving through water, or parked driven at high angles?
Trans fluid is oil with a different additives package and dyed red to make it easier to identify. Trans cooler liners are in that area, look closely, its possible fluid dripped or sprayed from the real leak onto that tube and its fooling you. Trans fluid in good shape is a pretty bright red, it can darken and loose the bright red as it gets older and worn out.
OEM axle fluid is brown/honey in color, but it might appear a bit red, some other axle fluids are red as well, its always possible the axle fluid was changed sometime ealier with a red colored axle fluid.