Chinese airlines fight for routes

China Southern Airlines Co plans to take advantage of its ties with American Airlines Group Inc to help beef up its US routes and close in on mainland rivals, the Chinese carrier's President Tan Wangeng said.

A new airport in Beijing, once up and running in 2019, will serve as the state airline's second hub flying almost 50 million passengers in and out of China, even more than the 30 million the carrier flew in 2016 from its home base of Guangzhou in southern China, Tan said. China Southern plans to operate 250 aircraft out of the new airport, and will introduce more US flights along with American Air.

"The market between China and the US is the biggest one," Tan told Tom Mackenzie in a Bloomberg Television interview broadcast on Wednesday. "We now have flights to cities like New York and Los Angeles but they are just not enough. We hope the frequency reaches a point where people can fly to Beijing for a conference and back to New York in a single day."

Tan's ambition is part of an ongoing race among China's top three state carriers to fly profitable routes to the world's major hubs. The second Beijing airport will free up more slots for members of the SkyTeam alliance such as China Southern, Shanghai-based China Eastern Airlines Corp and potentially break the dominance of Beijing-based flag carrier Air China Ltd in long-haul flights.

China's "big three" carriers have forged ties with their US peers in the scramble for more market share. China Southern sold a small stake to American Air earlier this year for $200 million, almost two years after Delta Air Lines Inc bought 3.55 percent of China Eastern for $450 million. Air China has a codeshare agreement with its Star Alliance partner United Continental Holdings Inc. In July, China Eastern and Delta each bought 10 percent of Air France-KLM through capital increases totaling $881 million.

"They invested in each other, though the amount is not so much," Tan said. "But the meaning is clear."

As the partnership between China Eastern, Delta and Air France-KLM deepened within the SkyTeam alliance, China Southern looked beyond this group for an ally in American Air, which is part of the rival Oneworld association. The move fueled speculation that the Chinese carrier may consider leaving SkyTeam and join Oneworld.

"It's sensitive and it's too early to say that." Tan said. "Now we are a member of SkyTeam, and we have strong cooperation with American Air. That's what I can say."

Bloomberg

(China Daily USA 11/24/2017 page2)