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Mar 28

American And China Southern Pair Up

It’s like that uncomfortable moment at the Bar Mitzvah, when the last remaining kids end up pairing to dance, not because they are great together, but rather, they just don’t want to be standing their awkwardly while everyone else is having a good time.

The Deal

china southern

It comes with a really pretty logo.

Okay, it’s not quite that bad, but I wonder if American was after this deal or if it was pushed into it. American Airlines has¬†shelled out $200m to buy a minority stake in China Southern, a deal similar to the one that Delta signed with China Eastern (United already had a partnership with China Air.). China is one of the fastest growing markets in the world and will eventually be the largest, so a position on the mainland is key. Since most countries are reluctant to allow other countries’ carriers to set up shop locally, partnerships often involve codeshares* and acquisitions.

For American, the partnership makes sense by expanding to the continent (It already has a strong partnership with Hong Kong-based Cathay Pacific.). China Southern has a hub at Guangzhou, a city of 14 million located just over 100 kilometers from Hong Kong.

China Southern picks up easier access to the US markets, as well as funding to support its growth. I hope they invest a bit of it in their website, which looks like it was programmed by, well, me.

 


Beginner’s Hint: A codeshare is a partnership between two airlines for a single flight. Each airline puts its own flight number on the flight, sells the flight and awards frequent flyer miles. But only one airline actually operates the flight and, of course, receives the lion’s share of the revenue. for example, if you are flying from the US to China, some or all of the trip might be on Cathay Pacific, an American partner, even if you bought the ticket from American. You’ll still get American Airlines miles, of course.

 

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