On Tuesday, American Airlines (Oneworld member) made announcement that it would make $200 million investment in China Southern Airlines (SkyTeam member) giving it 2.68% share of the Chinese carrier.
Delta made similar investment back in 2015 when it purchased 3.55% stake on China Eastern (both members of the SkyTeam).
American Airlines and China Southern plan to start codesharing and interlining before the end of 2017. The airlines will also offer ability to earn and redeem frequent flier miles on each others flights. It remains to be seen if status level benefits are also offered.
Here’s the press information from American Airlines:
World’s and China’s largest carriers solidify commitment with US$200 million investment
GUANGZHOU, China — American Airlines today has committed to make a US$200 million equity investment in China Southern Airlines, creating a strong foundation for a long-term relationship between two of the world’s biggest carriers. China Southern is the largest airline in China and is the ideal carrier for American, the largest airline in the world, to build a relationship within this critically important market.
“China Southern’s extensive network within China touches developing and thriving markets that only a Chinese carrier can reach, and they have a reputation and record of excellence,” said Robert Isom, president of American Airlines. “We are two of the biggest carriers in the world, and our networks are highly complementary, with the potential to offer China Southern and American customers an unmatched range of destinations in two critical markets for business and leisure travelers. This investment will allow us to build a relationship that will benefit our teams, the communities we serve and the millions of customers around the globe who travel with us each day.”
“We’re pleased to begin this relationship to better connect two of the world’s largest aviation markets and leading economies. Our cooperation has the possibility to create enormous benefits for our industry and customers around the world as we work to offer them more travel options and better value,” said China Southern Chairman Wang Chang Shun.
China Southern’s primary hub is located in Guangzhou (CAN) with the majority of its transpacific flights positioned there, while American flies to Beijing (PEK) and Shanghai (PVG) from its hubs in Chicago (ORD), Dallas Fort Worth (DFW) and Los Angeles (LAX). The carriers are planning to give travelers not only the amenities, features and the products that they want at different price points, but also a bigger network that serves the markets to which they want to travel.
Later this year, the two carriers expect to begin codeshare and interline agreements that will give customers access to many more destinations in China, as well as North and South America. American customers will be able to access nearly 40 destinations beyond Beijing and more than 30 destinations beyond Shanghai. China Southern customers will gain access to almost 80 destinations beyond LAX, San Francisco (SFO) and New York’s Kennedy Airport (JFK) in North and South America. The expected codeshare routes are anticipated to include the ability to earn and redeem AAdvantage® Miles, through-bag checking and the ability to book travel on a single ticket. The planned routes operating under the interline agreement are anticipated to include through-bag checking to the traveler’s final destination.
American currently offers daily service from DFW to Hong Kong (HKG), PEK and PVG; LAX to HKG and PVG; and ORD to PEK and PVG. All flights to PEK and PVG are operated on the airline’s state-of-the-art Boeing 787-8 Dreamliner, while its HKG flights are operated using its flagship Boeing 777-300. American also has Chinese-speaking flight attendants and offers fully lie-flat seats in first and business class cabins on all of its transpacific flights between China and the U.S.
I have flew with China Southern few times (most recently last month) and cannot say that I would have been blown away compared to airlines outside of the mainland China. Based on my limited experience with the Chinese airlines, there is very little differentiating between them when it comes to service, equipment and F&B provided.
American Airlines is here just buying access to the mainland Chinese market that tends to be very price sensitive, and Oneworld is lacking an airline that would have its’ base in the mainland China and could provide feeder flights. Cathay Pacific doesn’t count being in Hong Kong.