SkyTeam, Star Seeking Chinese Carriers To Join Their Airline Alliances

SkyTeam and Star Alliance each are pursuing China-based carriers through separate initiatives, opening alliances to the booming Chinese travel market.

Reports last month quoted CEO Jaan Albrecht saying the Star Alliance is seeking two carriers, due to the large size of the Chinese market, and would make an announcement in the approaching weeks.

A Star Alliance spokesperson said he could not give specifics, but confirmed that, "We are looking and we think we're close. It's a huge market and a very important market to the alliance." Aviation Daily reported that Star had been lobbying Air China and Shanghai Airlines to join.

One Chinese carrier that likely will not partner with Star Alliance is China Southern. SkyTeam in 2004 announced it had signed an agreement with China Southern, representing the preliminary steps toward full membership and "China Southern's intentions to undertake exclusive discussions to become a part of SkyTeam."

Mark Erwin, member of the SkyTeam steering committee and senior vice president for Asia/Pacific and corporate development for Continental Airlines, said, "We see them coming into SkyTeam by mid-2007. They're doing their own internal assessments and technical issues with respect to TravelSky, their internal system."

SkyTeam's Erwin said he is confident China Southern is the right fit, especially given its intra-China presence, which is largely uncovered by SkyTeam. At the end of 2005, the carrier operated 559 routes—of which 78 were international, 29 were to Hong Kong and the remaining 452 were to other destinations within China.

"They're very strong intra-China, but they also fly Guangzhou to Los Angeles," Continental's and SkyTeam's Erwin said. "Under the Sino-U.S. bilaterals, there are a number of unused frequencies from China to be assigned to Chinese carriers between now and 2010. We see the Chinese carriers as formidable competitors but also very strong partners."

Although Oneworld partner Cathay Pacific is based in Hong Kong, the carrier serves only two destinations in mainland China. "All the same, Oneworld regards mainland China as a priority area for us to recruit a major new member and we continue talks with interested candidates there," a Oneworld spokesperson said.