China Southern Airlines, one of mainland China’s largest carriers is rumored to be in proceedings to abandon their current membership in SkyTeam and instead join oneWorld.
Airline alliances always have a problem on their hands when there is a large area where they have no coverage for partners, codeshare flights and from a loyalty program perspective no redemption options either.
Mainland China has always been a sore spot for oneWorld as they have nothing there that would make it practical for a customer to be a member of any affiliated oneWorld frequent flyer program, especially if domestic travel and flights to smaller rural cities are involved.
The South China Morning Post (see here) had an article about this 4 days ago that also shines light on what that would mean for Cathay Pacific.
The airline industry is bracing for the mainland’s biggest carrier to pull out of one global alliance and join another in a move that could have a significant impact on Hong Kong’s Cathay Pacific group. …
China Southern president Tan Wangeng was recently quoted as saying the future of its alliance membership was “a sensitive topic”. …
“I think we have to accept the reality,” Delta Air Lines’ Greater China chief, Wong Hong, said. “It is more for them to think through and decide.” Delta is one of the founding airlines of the Skyteam alliance, which China Southern Airlines may pull out of after an internal review of the benefits and impact of a defection. …
With China Southern eyeing membership in Oneworld, which already includes Cathay Pacific and Cathay Dragon, Hong Kong’s flagship carrier could in turn move to Star Alliance. Remaining in Oneworld with China Southern would bring the two carriers’ home bases of Hong Kong and Guangzhou too close together, with destinations they serve overlapping and the airlines competing for the same pool of long-haul travellers. …
Skyteam said it was “unaware of any plan” for its “long-term and valued partner” to exit.
Oneworld CEO Rob Gurney said China Southern had not been in contact to discuss membership. The alliance is the only group without a mainland airline, and has made efforts to woo them over.
With plenty at stake, Gurney was keen to stress that Cathay was a “highly valued, outstanding airline”.
While nothing is set in stone about this entire exercise there are a few things in the SCMP article that I don’t necessarily agree with. Even if China Southern would eventually join oneWorld (which I hope they do) it absolutely doesn’t mean that Cathay Pacific has to go.
The proximity of Hong Kong to Guangzhou might be close but let’s not forget that not only are both locations in a highly populated area but we’re still talking about two different countries which requires immigration clearance in between and long border wait times.
Hong Kong people won’t trek across the border just because China Southern is now a oneWorld member. At the same time the amount of people coming over from Guangzhou isn’t going to change into either direction just because of an alliance entry of a local airline.
Cathay Pacific is still an airline that many customers fly for quality and their long haul sectors (especially to North America) are being fed from all over South East Asia. China Southern being in the same alliance ain’t going to steal a large amount of customers away from Cathay Pacific.
China is a very populous country and has a huge territory that is very well covered by Cathay Dragon and mainline flights. China Southern doesn’t have the longhaul frequencies that would establish real competition to Cathay. All of these connections already exist today, just a different Alliance won’t make customers all of a sudden choose China Southern. The airline simply can’t compete with Cathay.
Star Alliance would be an awful fit for Cathay Pacific and I can’t see any benefit for the carrier in changing alliances. If Mainland China is cause for concern then Air China is a far greater danger simply due to their hub size, frequency and domestic connections.
I for one would love if China Southern joins oneWorld rather sooner than later. The lack of options for a oneWorld customer who has China travel is really inconvenient and even utilizing my Star Alliance membership pretty much only helps when flying via Beijing (Air China). China Eastern and China Southern are both SkyTeam members and even though I’m currently China Eastern Silver due to the Starwood SPG cooperation it’s really bad having to fly without top tier elite status in China.