Delta Pretty Much Tells China Southern to Kiss Off From SkyTeam (and Will Cathay Pacific Join Star?)

Delta owns a stake in China Eastern, the country’s most subsidized airline giving them a presence in Shanghai especially. They’ve become even more linked, with Delta and China Eastern buying into and taking a board seat with Air France KLM along with Air France KLM taking an ownership stake in 49% Delta-owned Virgin Atlantic.

China Southern based out of Guangzhou has been left as something of a redheaded stepchild in Delta and Air France-driven SkyTeam. And American has gone ahead and invested $200 million in China Southern, giving them their own foothold into mainland China.

The South China Morning Post says China Southern is on the verge of leaving SkyTeam and quotes Delta more or less telling them to kiss off.

“I think we have to accept the reality,” Delta Air Lines’ Greater China chief, Wong Hong, said. “It is more for them to think through and decide.”

…“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.”

“Today” and “officially” as in de jure if barely de facto China Southern is a member of SkyTeam, of course we know that much already, it’s on the SkyTeam website and Delta isn’t even trying to sell them on staying they’re just saying they’ve ‘accept[ed] the realty’ of the airline’s departure and entirely up to them ‘to think through and decide’.

The piece’s author suggests this sets up a conflict with Cathay Pacific, in whom Star Alliance member Air China has a large stake, given the proximity of Chinese hubs should China Southern bolt for oneworld with American Airlines. American has never managed to bring Cathay into its transpacific joint venture with JAL, leaving them only loosely linked (although they have a new large investor in oneworld member Qatar, themselves on the outs with American).

Delta of course not only has its investment in China Eastern but a pending joint venture across the Pacific with Korean Air as well, reducing the need for Guangzhou connections.

I’m not sure that Cathay so obviously bolts for Star, though, which does feature Shenzhen Airlines based a mere 24 miles from Hong Kong (which has more planes than Cathay Pacific does on its own, though narrowbodies, and which has a codeshare relationship with Cathay Dragon) along with Air China, Thai Airways, Singapore Airlines, ANA, and Asiana so the Star field in Asia is already crowded.

The Morning Post points out that Cathay’s “business ties are stronger with Star members Lufthansa, Air China and New Zealand’s national airline.”

Could this happen? Certainly. Is it imminent? It seems less likely than China Southern’s departure from SkyTeam.

This would be a huge blow to the value of American AAdvantage miles, though award space on Cathay is far scarcer than it used to be. And it would be a huge blow to oneworld elite status, since The Pier and The Wing first class lounges in Hong Kong are accessible to oneworld member top tier elites regardless of class of service flown on a oneworld airline same day. Star Alliance rules do not similarly provide for first class lounge access.

(HT: One Mile at a Time)

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. i don’t see how ANA would be overly upset considering there are lots of secondary SE Asian airports that they don’t fly to but CX+KA does. UA also has code-sharing partnership with Air China to fill secondary mainland airport gaps that ANA leaves out.

    The DL-AF-KL-MU convoluted cross equity deal is already the clearest signal they’re kicking CZ to the curb. CZ leaving is nearly guaranteed. CX switching is not too certain, but it would surely send a major blow to oneworld. The double-switch would hardly be noticed at Skyteam, a major win for Star, and an absolute downgrade for oneworld.

    ps : there’s also EVA among that list of East Asian airlines.

  2. I’m EXP on AA primarily because of the flights I take to Asia on CX. If they leave I would have to reevaluate my oneworld membership. JAL is a good airline but Tokyo is not as convenient as hub as HK and they don’t have the flight frequency of CX

    I’m hoping AA is putting on a full court press to keep them on the Oneworld team or they may lose a lot of people like me

  3. It would be very sad to see CX leave OW for Star, because we would lose access to the great 1st class lounges and also lose out on earning EQDs on CX fares (since UA only counts EQDs on 001 ticket stock).

  4. Bear in mind that China Southern has announced a ‘double-hung’ strategy when the new Beijing Daxing airport opens and said to base 250 aircraft at the airport by 2025. So perhaps the overlap between Hong Kong and Guangzhou won’t be that much of an issue…

  5. Just keep China Southern from Star Alliance and One World; flew them in business with hard bed and worse food…..never again

  6. @since UA only counts EQDs on 001 ticket stock : 001 is AA’s prefix. If you’re talking UA it’s 016.

    As for missing out EQD on CX fares, unless you’re close to full fare econ or above, you would’ve been missing out on all these econ fare codes – K, M, L, V, Q, S, G, N – already. Those have been earning absolutely zero unless code-shared with AA.

    What really sucks is full fare paid 3-class F on CX only earns 150% EQM when booked as CX code when other regional rivals can earn 300+%.

  7. It’ll be great to see CX in *A. That’ll mean many Asia-based credit card offerings with mile transfer programs would eventually credit to either *A frequent flyer program! (the other one being SQ’s)

  8. It’s not very likely that CX will leave. It was lazy speculation re CX – I won’t even call it reporting – by SCMP without any real analysis. To say there will be a domino effect after CZ is certainly possible but it would irresponsible to make assumptions on how they fall.

    There is no fundamental reason CX will tie up *A. One could cite LH as one factor for generating European connections but CX’s ties run deep with IAG (BA & Iberia) which is now even more interconnected given they fly to MAD, BCN, and will be flying to Dublin further expanding the relationship with IAG & Aer Lingus expecting to join OW.

    UA is already pursuing its strategy of direct flights to China bypassing the need to stop in HKG to transit.

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