Just recently we revealed that China Southern would be leaving their air alliance Sky Team, by choosing not to renew their membership.
This led to a cascade of other airlines renouncing their air alliance citizenship, raising the question that maybe air alliances just don’t have a place anymore!
The latest airline to cast doubt about their membership is One World founding member Cathay Pacific.Cathay Pacific recently took delivery of their first A350 aircraft. Photo: Airbus
Why would Cathay Pacific leave their Air Alliance?
Now, its one thing for a small airline to leave an alliance, such as Kenya Airways (Fleet size 40 jets to 53 destinations), but for a founding member to leave it is a whole other ball game. So what situation could possibly occur to move Cathay Pacific from their perch?
China Southern. You see, China Southern just announced they would leave sky team. This is because the Sky Team ‘captain’ Delta, is actually investing in China Eastern (Southern’s rival). On the flip side, One World ‘captain’ American Airlines is investing in China Southern.
Last year American Airlines – part of the Oneworld club – sealed a US$200 million (HK$1.5 billion) deal with China Southern, which included the US carrier taking a 2.76 percent stake in the company. – South China Morning Post
A fact that Cathay Pacific is not happy with, as American is essentially investing in their rival who is based just over the border from Hong Kong.
China Southern is China’s biggest carrier by passenger volume and is headquartered in Guangzhou…just 84 miles from Cathay Pacific’s home base of Hong Kong. – Travelling For Miles
Additionally, Qatar is heavily invested in Cathay Pacific and it’s well known just how unhappy they are with One World.
Cathay Pacific has also been investing in joint venture partnerships outside the alliance, with airlines like Air Canada (Vancouver is one of the biggest enclaves of ex-Hong Kong Chinese in the world) and Lufthansa. Both these two airlines compliment Cathay Pacific’s route networks.
All these factors set the stage for Cathay Pacific’s withdrawal from the network.
What will Cathay Pacific do if they leave One World?
The next question is if they do leave, where will they go?
One option on the table is that they will join Sky Team. Sky Team founding member Delta is investing in China Eastern (China Southern’s rival) and as the saying goes “The enemy of my enemy is my friend”. Cathay Pacific could really find a mutual benefit with Sky Team and be able to leverage a whole slew of new route networks. this would also get them out the hot water with American Airlines and their ‘will they/ won’t they’ relationship with Qantas (Who fights with them over the Sydney to Hong Kong route).
However, other members of Sky Team, such as Vietnam Airlines may not appreciate a new competitor flying over the South China Sea and may veto their application. Likewise with Singapore Airlines for Star Alliance.
The other alternative is to the join the new Qatar alliance.
Qatar Airways is heavily invested in the following airlines:
- British Airways parent International Airlines Group (IAG) – 20%
- South America’s LATAM Airlines – 10%
- Air Italy (Previously Meridiana) – 49%
- As well as Cathay Pacific – 10%
They are also interested in investing in an American airline, after being refused investment in American Airlines earlier this year.
If Qatar left one world, it might use its power to build its own alliance of these above networks.
“Cathay Pacific is one of the strongest airlines in the world, and has massive potential for the future” – Akbar Al Baker chief executive of Qatar Airways
This story is still developing. Do you think Cathay Pacific should leave One World?