SkyTeam Is Forcing American & China Southern To Scale Back Their Codeshares

Filed Under: American, China Southern

In early 2017, American Airlines bought a $200 million stake in Guangzhou-based China Southern Airlines. On some level this was surprising, given that prior to this the two airlines didn’t cooperate in any way. They had no codeshare agreements, and American doesn’t even fly to to Guangzhou. American said that this investment “creates a strong foundation for a long-term relationship between two of the world’s biggest carriers.”

It didn’t seem to me like they had huge plans overnight, though rather this seemed somewhat reactionary, as Delta bought a stake in China Eastern a few years back, while American doesn’t have a single partner airline based in mainland China.

When this partnership first launched, American and China Southern announced their intentions to begin codesharing, with the ability to earn and redeem miles, through-check bags, and book travel on both carriers on a single ticket, but only on codeshare routes.

Let’s keep in mind that on top of that there have been rumors of China Southern leaving SkyTeam and joining oneworld. If it weren’t for Cathay Pacific, this seems very likely to me, as oneworld doesn’t have an airline based in mainland China, while China Southern has second-rate status in SkyTeam, given Delta’s close partnership with China Eastern.

The issue is that Cathay Pacific has veto power in oneworld, and many think that they wouldn’t want another airline to join that’s based so close to Hong Kong. This has also lead to rumors of Cathay Pacific leaving oneworld and joining Star Alliance, though I doubt that’s going to happen.

Anyway, while the relationship between American and China Southern isn’t that close yet, it looks like it’s already too close for SkyTeam. Aviation Week is reporting that as of January 18, 2018, American and China Southern are being forced to reduce their number of codeshare routes from 29 to 16.

Under this revised agreement:

  • China Southern Will codeshare on American’s flights from Los Angeles to Chicago, Charlotte, Houston, Philadelphia, and Phoenix, as well as American’s flights from San Francisco to Dallas and Phoenix
  • American will codeshare on China Southern’s flights from Beijing to Changchun, Changsha, Chongqing, Guangzhou, Dalian, Harbin, Nanning, Shenyang, and Shenzhen

So, why are the two airlines having to scale back their relationship with one another? Allegedly because China Southern has exceeded the maximum number of codeshare routes allowed by SkyTeam with non-alliance airlines. I wasn’t aware this was a restriction, but SkyTeam limits the number of codeshare routes that airlines can have with airlines not belonging to the alliance. Keep in mind this isn’t China Southern’s only codeshare agreement out of the alliance. They even recently announced a codeshare agreement with British Airways.

There are an increasing number of reasons that China Southern should leave SkyTeam and join oneworld, though it looks like the only thing standing in the way is Cathay Pacific…

  1. You write: Let’s keep in mind that on top of that there have been rumors of China Southern leaving SkyTeam and joining oneworld. If it weren’t for Cathay Pacific, this seems very likely to me, as oneworld doesn’t have an airline based in mainland China, while China Southern has second-rate status in oneworld, given Delta’s close partnership with China Eastern.

    Don’t you mean that china Southern has second-rate status in SkyTeam (they’re in SkyTeam, and they are second rate to China Eastern)? Otherwise, i dont think this makes sense.

  2. China Southern is a truly awful carrier with no customer service.

    Skyteam is well rid of them.

    AA will regret it’s decision once the complaints roll in.

    China Southern refuse to accept any accountability for their rude staff and flight delays

  3. Why doesn’t China Southern leave Skyteam and just try to find as much partners as they can get? I mean, do the same model as Gol (G3). They are partners with Emirates, Air Canada, TAP, Air France/KLM, Copa Airlines, Korean Air.
    They could try to even partner with Alaska and American.

  4. Oneworld has always been the smaller, premium alliance hence why it doesn’t have 927 airline members like *A have or has all the leftovers like Skyteam has.

    Accepting China Southern into Oneworld would radically change this.

  5. I keep hearing people complain about China Southern, but their customer ratings on both Skytrax and TripAdvisor are significantly higher than China Eastern…?

    Also if it’s so hard for CZ to switch to oneworld, maybe they should join Star Alliance instead? Then CX also doesn’t need to leave oneworld.

  6. @Tam : CZ’s 2nd largest hub is PEK. If CZ enters Star, CZ+CA+Shenzhen combined would have insane market share control at Beijing, something that most regulators would be very uncomfortable with, with or without the upcoming Daxing Airport.

  7. If China Southern joins oneworld, at least it will be easier to redeem a China Southern first class seat through AAdvantage now that Korean Air Skypass doesn’t allow for CZ F redemptions! 😉

  8. @Leo, really? I never take china south, but air china and china east all server bottle water in the beginning of the flight. During the flight, if you ask for water they will pour from big bottle but still bottled water.
    I know big 3 Chinese airlines are mediocre but I have hard time to believe they don’t server bottle water.
    The only time I had problem to get something simple in the international flight was with AA from JFK to Tokyo, they serve so little food I got really hungry in the middle of flight but they claim they only have cracker, nothing else.

  9. Too bad for AA, Cathay and HKG is much more valuable to OneWorld than China Southern.

    If AA wants a significant partnership with a mainland China airline with the potential of inviting the new partner into OW they should have went with Hainan.

    China Southern’s large hub at Guangzhou is a big problem for Cathay.

  10. just an editorial point. do you mean China Southern has second-tier status at Skyteam? The e-mail and online versions say second-tier status at oneworld. Surely they won’t leave Skyteam to join oneworld as a second-tier partner?

    ” while China Southern has second-rate status in oneworld, given Delta’s close partnership with China Eastern.”

    Also, I mostly fly Skyteam (more than 90% of my flights). Even though Air Europa is the absolute worst airline I’ve ever experienced on so many levels, China Southern is a close second. Fourth rate airline in a second-rate alliance.

    Not a very happy Skyteam member, just started flying KLM a lot whilst living in NL for a few years and stuck with them.

  11. IMO having Hainan as a Oneworld member would not get much done
    Chinese government has long been favouring 3 former CAAC carriers (Air China, China Eastern, China Southern) and their subsidiaries. Thus all the profitable routes out of China’s major economic hubs are operated by the big 3. On the other hand, since Hainan is a private airline founded by a private company and the Hainan provincial government, Chinese civil aviation department never really gives much love to Hainan airlines.

    Hainan’s long haul destinations are mostly second tier cities that the “big 3” are not interested in. This explains why Hainan flies to Manchester instead of London Heathrow, Berlin instead of Frankfurt or Munich etc. HNA does have flights to first tier cities like LA Paris etc, but those flights operate out of second-tier Chinese cities with limited demands (Shanghai/Beijing/Guangzhou – LA would be way more profitable than Changsha-LA, but Changsha was only option they could take…)
    There are some exceptions, such as ORD-PEK, but this is a very rare case of Hainan flying to first tier North American city out of a major Chinese city.

    Unless the Chinese government lifts restrictions on its airline policy, I can’t really envision Hainan airlines growing to become a world-class carrier.

  12. As a staunch Oneworld flyer, I would want Cathay Pacific to stay in Oneworld. Cathay providies so much connecting flights to every corner of Asia without going through hellish mainland Chinese airports. I’ve connected through a few mainland airports using the 72 hour visa-free scheme, and it was not fun nor convenient.

    Not a big fan of BA nor AA, but as I’m based in two of Oneworld’s biggest hubs (those being London and Miami), there’s simply not much convenient alternatives.

  13. @Jeff – Your points are valid, but I don’t think that the OneWorld airlines care too much about Hainan’s international route network (or even China Southern’s in this case). It’s the domestic Chinese market they want to feed their long haul flights. Hainan does provide a relatively decent intra China route network and I suspect that will get better out of PEK when Daxing opens in 2019 I believe.

    AA flies PEK-LAX/DFW/ORD and wants access to the PEK-CAN/XIY/CTU/CSX/etc market. Same for BA, JL, AY, QF and many others. Heck I think even CX would benefit from having greater access to secondary and trietary Chinese city through Hainan and given Hanian’s size and hub locations they won’t feel threatened like they do with CZ.

    Conversely, Hainan could greatly benefit from OW feed on their long haul flights like Changsha-LAX or even PEK-MAN (BA has a strong base there).

    It’s not too much about Hainan’s long haul destinations from OW’s perspective but their access to the Chinese domestic market.

  14. @Jeff – Also have to add that Cathay would likely want to veto Hainan joining OneWorld… They probably wouldn’t appreciate the parent of Hong Kong Airlines, one of their main competitors in HKG joining the same alliance as them

  15. @Golfingboy, but do not forget CA is at CX’s back, in terms of competitions in Domestic China market. Many years ago, there were rumours about HU joining OW, but CX (or CA) did against it strongly.

  16. OW is premium airlines only? seriously? i’d take CZ anyday than MH. OW needs CZ a lot more than the other way.

  17. IMO, CZ is a lot better than MU in terms of service and catering. I love flying their J class fares in CZ from CAN – LAX. But lately their prices have been very expensive so I’ve opt’ed for MU instead. However, I don’t think CZ is leaving skyteam anytime soon. CX is too big of a player for oneworld but having CZ as a second tier skyteam baffles me.

  18. @Golfingboy,

    Hainan owns Hong Kong Airlines, Cathay’s most bitter local competitor, so I would expect CX to have far more issues with Hainan joining OW, rather than CZ.

  19. Good points about HNA and Hong Kong Airlines…

    Completely forgot about that piece, hopefully one day HNA will go away (not a well run business) and spinoff the airlines into their own separate entities..

  20. @JZ
    You serious? I would take MH over CZ any day.
    MH’s main hub is a dump though CZ’s is not that much better.
    But MH’s onboard service is so much better than CZ.

  21. Well, being an OW Elite member and living in Japan, have very few airline option to travel around Asia from here. (4 OW airlines comparing to 8 carriers on Star Alliance and even 6 on Sky Team)

    CX is good, MH isn’t bad, but I avoid JL because I felt uncomfortable with the temperature inside the aircraft. According to a flight attendant (that answered me like a robot when I flew JL last time), temperature is always around 26/27C(81/783F) because japanese flyers “feel cold”. I’ve heard *A ANA follows the same. 27C/83F all flight? Seriously?!

    CZ may not be the best option to join OW to replace AB, but I believe that having more carriers joining OW could improve their hubs not only in Asia. CX is comfortable (and not affordable) here because there’s no other chinese on their way. Btw, I’ll leave the OW to Star Alliance soon after having my cards expired.

  22. CZ doesn’t have to join OW as long as they keep working closely with AA. AA would have more destinations in mainland China than solely depending on CX. Also, CZ would have more destinations in South America otherwise they have to invest so much money to get into those markets.

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