Airline industry braces for China Southern exit from Skyteam alliance

The airline industry is bracing for the mainland’s biggest carrier to pull out of one global alliance and join another in a move that could have a significant impact on Hong Kong’s Cathay Pacific group. “I think we have to accept the reality,” Delta Greater China chief, Wong Hong, said. “It is more for them to think through and decide.” Delta is one of the founding airlines of the Skyteam alliance, which China Southern Airlines may pull out of after an internal review of the benefits and impact of a defection. With China Southern eyeing membership in Oneworld, which already includes Cathay Pacific and Cathay Dragon, Hong Kong’s flagship carrier could in turn move to Star Alliance. Remaining in Oneworld with China Southern would bring the two carriers’ home bases of Hong Kong and Guangzhou too close together, with destinations they serve overlapping and the airlines competing for the same pool of long-haul travellers. Joining Star Alliance, the same club as national carrier Air China, would bring Cathay closer to its second-biggest shareholder. Guangzhou, the main airport for China Southern, is only 120km from Cathay’s home base, and handled 60m travellers last year, 10m fewer than Hong Kong saw. For now, China Southern was still playing an important role, Wong said. “Until such time … [the move] is a decision China Southern may make at some point in the future. Today, officially, they are with us and they are no different to any other Skyteam partner.” China Southern president Tan Wangeng was recently quoted as saying the future of its alliance membership was “a sensitive topic”.<br/>