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.
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