If China Southern Joins Oneworld It Could Change Cathay Pacific’s Fortunes For The Better

China Southern has done what Qatar has always said they would do, and quit their alliance.

Essentially, China Southern has decided to not renew its membership to Sky Team, as of the start of next year. This has left industry experts wondering where they will go next if they stay independent or if they will join Star Alliance or Oneworld.

Boeing 787
China Southern recently took ownership of the 787th Dreamliner 787. Photo: Boeing

Of course, many point out that 100 miles away in Hong Kong, is the hub of current Oneworld member Cathay Pacific.

And, as it turns out, China Southern has no desire to compete with Cathay, meaning a joint venture may be on the cards.

This might be the best thing to happen to Cathay this year.

Cathay Pacific vs China Southern

Let’s compare the two airlines to better understand the dynamics between the two.

China Southern, Based in Guangzhou has a fleet size of 590 sets (With another 283 on the way).

Cathay Pacific, on the other hand, is based in Hong Kong and only has 129 jets (With 41 jets on order).

Guangzhou and Hong Kong are the super-equivalent of San Fransisco and Oakland, two major cities only separated by water and surrounded by suburbs. Also known as the Pearl River Delta, is a region comprising 11 cities with a combined population of 68 million and an annual economic output of US$1.4 trillion.

Source: South China Morning Post

Essentially, there is plenty of market to share, and if the two airlines work together they could dominate the landscape.

China Southern
China Southern waves goodbye to old alliances

How could Cathay and China Southern work together?

China Southern, whilst much bigger than Cathay, does not actually reach much further outside of China . The bulk of their resources and efforts are focused on Chinese domestic travel. Cathay on the other hand, does not have much in the way of Chinese domestic market share but instead focuses on international growth (to destinations like Dublin, Frankfurt, Boston, Milan, Tel Aviv and Madrid).

Thus, there is a natural synergy.

“Ultimately this [would be] a win-win for both airlines. Whilst the issue of respective alliance membership will always be interesting, the fundamentals of strong markets with significant growth potential hold good for both airports and their respective airlines,” – Mayur Patel, OAG’s Japan and Asia-Pacific sales director.

Additionally, American Airlines, Cathay Pacifics Oneworld partner has invested $200 million into China Southern and would welcome a new partner in the region.

American airlines
American Airlines Livery

They do, however, have some hurdles.

They share 61% destinations, as in, they both have routes flying to the same place and would need to find a way to reduce direct competition with one another.

This could be solved by code sharing routes, allowing their planes to be used elsewhere (And open up new routes).

An example of cooperation between the two would be code-sharing stopover flights which marry a long Cathay Pacific flight with a shorter China Southern flight into mainland China, to open up more Chinese destinations to people in places like Europe and North America. – SCMP

What do you think? Should Cathay Pacific and China Southern work together?