One of the world’s largest airlines, China Southern Airlines has announced that it will quit the SkyTeam alliance from 2019.
China Southern said it will leave SkyTeam to develop its own strategy, which includes pursuing new partnerships and strengthening its partnership with American Airlines. The US-based airline made a US$200 million investment in China Southern in return for a 2.7% stake in the company.
Why it matters?
China Southern’s move is not unexpected, given the news in 2017 that they were ‘considering’ leaving the alliance.
Even then, the Guangzhou-based carrier’s departure is the first in recent times. Most airlines who left alliances in the past has almost always been a result of mergers and acquisitions by bigger airlines that belong to a different alliances.
Kristin Colvile, SkyTeam CEO, was quoted in a SkyTeam statement saying:
“Network has always been the foundation of SkyTeam. Our new value proposition retains that strong integrated network and combines it with our continued focus on improving customer experience through technology. China Southern has been a valued member of SkyTeam. We respect its decision and wish it well.”
The airline will give itself about a year to transition out of the alliance, so the impact on customers will be limited. This means that you will most likely still continue to enjoy the benefits in 2019 if you are a China Southern’s Sky Pearl Club (I really won’t be able to comprehend why though), or if you are travelling on China Southern and wanting to still accrue miles on your SkyTeam frequent flier programme.
Beyond 2019, I’ll advise you to consider carefully before booking.
What are alliances?
Most airlines around the world are in one of three global airline alliances – Skyteam, Star Alliance and Oneworld. Alliances benefit customers because most interline and codeshare agreements are within alliances, and also members can use their frequent flier points and benefits with other airlines within the same alliances too.
Airlines within the same country or geographical location who compete with one another tend to join different alliances to differentiate their own offerings and partnership benefits.
For instance, in the US, the big three carriers – Delta, American and United – belongs to SkyTeam, oneworld and Star Alliance respectively, bringing their customers the strengths of their alliances.
Closer to home, Singapore Airlines is a Star Alliance member, while Garuda and Malaysia Airlines belong to SkyTeam and oneworld respectively.
China is an exception to the rule: China Eastern and China Southern are both SkyTeam members. There are no Chinese carriers that belong to oneworld, so Cathay Pacific poses a good advantage for oneworld customers who wants to travel to China.
Having said that, airlines today are also breaking out of the alliance mould and moving towards forging one-to-one relationships with other airlines, in or out of alliance.
For instance, Qantas inked a 10-year partnership with Emirates back in 2013, effectively providing connections between Australia and Europe via the Dubai hub. Qantas is a oneworld member while Emirates is not affiliated with any alliance.
It remains unseen on what will China Southern do next, even though there has been rumours circulating widely that it was considering oneworld as its next port of call, which will only spell trouble for Cathay Pacific if that happens.