More airlines make cross-alliance cooperation deals

Updated 2017-03-31 10:01:10 Global Times
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Fading factions

On the same day, some of the world's largest airlines struck deals that left industry observers wondering about the future of airline alliances.

On Tuesday, American Airlines (AA) invested 0 million in 270 million Hong Kong-listed shares of China Southern Airlines, Asia's largest airline in terms of fleet size, adding to expectations for greater cooperation between the two carriers.

The same day, Hong Kong-based Cathay Pacific Airways and Lufthansa Group, Europe's leading airline group, announced that they will offer their passengers selected flights under each other's flight numbers.

The code-sharing agreement's goal is to improve connections between the city of Hong Kong and Australia and New Zealand.

The deals are interesting because Cathay Pacific Airways and AA are founding members of Oneworld alliance; Lufthansa Group is a founding member of Star Alliance, and China Southern is a member of Sky Team.

The aforementioned deals involve members of different alliances, marking it clear that more and more airlines are willing to strike deals outside their alliances.

China Southern and AA negotiated for more than a year to reach their deal, which is a play to grab more of the booming China-US commercial flight market, according to media reports.

AA has daily flights to China from Dallas, Los Angeles and Chicago, but its ability to offer flights to more inland Chinese cities has been limited by the fact that there are no other Oneworld members on the Chinese mainland.

Although AA recently received government approval for a route from Beijing to Los Angeles, it failed to win an airport slot in Beijing, delaying the route's launch. For its part, China Southern is eager to extend its network into the US.

With its deal with AA, China Southern can increase its presence in the US market and further extend its network with support from Delta Air Lines, which like China Southern is a member of Sky Team.

These examples of cross-alliance cooperation also mean that the airlines are putting their own interests ahead their alliances' interests, so it is likely more airlines from different alliances will strike cooperation deals. The situation shows that airlines are growing more practical.

Cross-alliance cooperation isn't unheard of. In 2009, after China Eastern Airlines acquired Shanghai Airlines, the latter withdrew from Star Alliance to join the former's alliance, Sky Team. In 2010, Continental Airlines left Sky Team to join the Star Alliance following its merger with United Airlines.

It is clear that alliance loyalty won't stop airlines from changing alliances or working with members of other alliances.

Airlines created the alliances to extend their networks by cooperating with fellow members, but with a sluggish global economy, the reality has changed, and airlines have to be willing to adjust strategy to remain profitable.

Perhaps the just-stepped-down Etihad CEO James Hogan had the best explanation for why airline alliances are waning.

“The traditional airline alliances have evolved into slow-to-respond, bureaucratic organizations which struggle to deliver added value to their member airlines, many of which are no longer compatible with each other,” Horgan said at the International Aviation Club in Washington in 2013.

It might be a little early to say for certain if Horgan is correct.

By the way, there are no eternal friends or eternal enemies, only eternal interests.es make cross-alliance cooperation deals

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