China Southern announced Thursday that it is to leave the Skyteam Alliance and strengthen its ties with American Airlines, who recently spent $200m on buying a stake in the China Southern Group.
This will come as a blow to Delta who also worked extensively with China Southern on a Skyteam based joint venture with AF-KLM, which included various financial transactions enabling Delta to gain proxy control of Virgin Atlantic.
China Southern is a key player in the Chinese market and its position at the new Beijing airport gives it a huge advantage as the benefit unfolds.
The loss to Skyteam is fairly profound, even more so when it seems that China Southern isn’t just leaving but could well join Oneworld.
Xiamen Airlines will also leave as a China Southern subsidiary. Both leave on January 1st 2019 with a full exit by the end of the year.
It’s not the end of the world for Skyteam in China as rival China eastern is also a Skyteam member.
Oneworld has far less rigorous approach to non-member joint ventures and business arrangements, such as that with Qantas and Emirates. This would allow it to continue with its joint ventures and codeshares while giving it the benefits of being in a less restrictive alliance.
This news comes on the back of Qatar’s announcement that it finds American Airlines and Qantas (who have a close partnership and Joint Venture with American), to be generally hostile to its membership and less than cooperative. Qatar is almost certain to leave the alliance in 2019.
Many now question the value of these alliances as non-alliance joint ventures and code shares become ever more common. Qatar has suggested its own version and airlines like Emirates simply use their huge clout to eschew them altogether, preferring code share arrangements and commercial agreements.