Back in March, China Southern and American Airlines announced a close partnership, with AA acquiring a stake in the Chinese carrier. Now as the relationship continues to develop, China Southern is putting out feelers for leaving SkyTeam.
If you recall, American committed to investing $200MN in China Southern (CZ) in exchange for an equity stake. The partnership will include:
- Codesharing and an interline agreement that gives passengers the ability to book to more destinations in China and the Americas on a single ticket
- Includes more than 40 new destinations in China (beyond Beijing and Shanghai, which AA currently serves directly)
- Includes nearly 80 new destinations in the USA (beyond Los Angeles, New York, and San Francisco, which China Southern currently serves directly)
- The ability to earn and redeem AAdvantage miles when flying on China Southern
American likely won’t start flights anytime soon to China Southern’s main Guangzhou hub, but will certainly benefit from connecting CZ’s traffic to/from LAX/SFO/JFK. Meanwhile, China Southern hopes to funnel some AA passengers onto its overseas flights.
You may be asking–wait a moment…isn’t AA in the oneworld alliance and China Southern in SkyTeam. That is correct. And there is where the potential problem lies.
Aviation Week reports–
China Southern Airlines, a SkyTeam member that is now partly owned by oneworld mainstay American Airlines, has indirectly raised with managers the possibility of shifting to another alliance.
In plans for cooperation with American, the Chinese carrier has also sought to increase its non-SkyTeam codesharing—specifically, with Oneworld members—beyond limits to which it and its alliance partners have agreed.
Alliances are simply that…alliances. Allies, not necessarily partners. The degree of harmony and interconnectivity between members of the same alliance varies greatly. Alliance members are not forced to codeshare with one another. They are not forced to do much beyond reciprocal baggage allowance, elite check-in and boarding, and lounge access for elite frequent flyers.
How China Southern is Breaking SkyTeam Rules
But while alliance members may not be forced to do anything, they do pledge not to do certain things. One of those things is to excessively codeshare and otherwise partner with carriers in other alliances.
Put simply, the close China Southern relationship with American Airlines puts its SkyTeam membership in jeopardy. It does so by exceeding the limits CZ pledged to abide by when joining in the first place.
Exit procedures for an alliance member are contracted for and usually quite expensive…American won’t like the price tag if it has to buy out China Southern from SkyTeam. But with no Chinese Mainland carrier belonging to oneworld, this may be the best course of action for both sides.
CONCLUSION
In one sense, everything is lining up perfectly for a transition. China Southern also codeshares with Qantas, a oneworld carrier. We are also hearing rumors of Cathay Pacific leaving oneworld for Star Alliance and a closer relationship with Air China. We will see how this all plays out. Perhaps the most interesting question will be how SkyTeam reacts as China Southern continues to cozy up to AA.
image: byeangel / Wikmeida Commons
“We are also hearing rumors of Cathay Pacific leaving oneworld for Star Alliance”
OMG, that would be a disaster.
Sergey
for sure, I doubt the change would be good for those of us that use miles to travel.
Any word on timing around miles redemption on China Southern using Aadvantage miles?
I’m eagerly looking forward to liquidating what’s left of my AAdvantage account to redeem award tickets to fly on CZ and try some of the world renowned wines they serve onboard especially the Duc de Paris.
Interesting about the rumours that CX will be hopping over the Star Alliance, which are substantiated by their recently developed partnerships with AC and the LH group.
CX has truly been a diamond in the oneworld alliance crown. If CZ joins, it would truly be a CZ instead of a diamond.
Makes sense for CZ to exit as ST already has MU and MF with KE moving up with the DL JV. OA needs this partnership badly to get access to mainland markets but CX is going to hate it as GZ is literally in their backyard. CX can’t switch to ST for the same reason. So that just leaves *A which would really be the premier alliance, IMO, if it wasn’t for UA.
I wonder would Cathay leave Oneworld now that Qatar has purchased sub 10% stake in Cathay.
http://www.reuters.com/article/us-cathay-pacific-m-a-qatar-airways/qatar-airways-agrees-to-buy-9-61-percent-stake-in-cathay-pacific-idUSKBN1D601T
I think the rumours of a CX move to Star Alliance are greatly exaggerated… Joining the same alliance as SQ would substantially increase competition on their key connecting flows of SE Asia to Europe and North America, and would mean that the two long haul routes thy have the highest frequency on (LHR and JFK) are largely cut off from feeder flow, while they would have to scramble for more slots at FRA and EWR. Now that Qatar has bought in I find it almost impossible to believe they would make such a move.
Interestingly, I wonder if CZ joining OW would really help fill their China gap, which is more about direct serviced into NORTH China, given they already have CX/Cathay dragon connecting to most Chinese cities through HKG.