On Thursday, China Southern Airlines announced that it will be leaving the SkyTeam airline alliance by January 1 next year as part of its goals to meet its development targets.
SkyTeam is one of the world's three major airline alliances - the other two being Star Alliance and oneworld - and has both China Southern and China Eastern Airlines as its members despite the fact they both operate in the same market. All three offer passenger benefits like lounge use, frequent flier points and allow airlines to transfer passengers to their partners for revenue.
According to a source who spoke to Reuters about the issue, China Southern is leaving the alliance because it is expensive relative to the benefits of the membership. Currently, it is considering joining oneworld but has yet to make a formal decision on the matter.
Cathay Pacific is one of the founding members of oneworld alliance, and can veto new members from the Chinese market so the possible inclusion of China Southern to the alliance may be thwarted. China Southern's Guangzhou hub is currently competing with Cathay for traffic.
In their statement to the Shanghai Stock Exchange, China Southern said that it did not expect its decision to leave the alliance to affect its operations.
Meanwhile, SkyTeam said that it will work with China Southern to ensure smooth transition for all its customers and partners and it will be finished by the final half of 2019.
Xiamen Airlines is also a member of SkyTeam, but according to its spokesman Qiu Dapeng on Thursday, it does not have any plans to leave the alliance.
China Eastern is currently partnered with other SkyTeam members, namely Delta Air Lines and Air France. American Airlines, a member of oneworld, has spent $200 million last year for a stake in China Southern and it is expected that they will strengthen their partnership.
