Airline alliance Oneworld is to continue to court Shanghai-based carrier, China Eastern Airlines as a potential future member despite Singapore Airlines, a member of a rival alliance, taking a stake in the carrier.
Singapore Airlines is a member of Star Alliance, but Oneworld says that it can still accommodate carriers in China that are partners with another group.
John McCulloch, the alliance's managing partner, said, at a briefing on the sidelines of the International Air Transport Association annual general meeting in Vancouver that he does not believe SIA's expected purchase of a sizeable minority stake will complicate Oneworld's discussions with China Eastern.
"China is an unusual market for this sort of activity. We are proceeding as before," "I don't think it is going to complicate things," he says.
China Eastern is the only one of China's "big three" carriers that has yet to commit to joining an alliance, after Air China announced last year that it would join Star and China Southern Airlines earlier declared that it would join SkyTeam.
McCulloch says Hong Kong-based Oneworld member, Cathay Pacific Airways, already has a sizeable stake in future Star member Air China, so there is a precedent for cross-alliance shareholdings in the China market.
He says that as Cathay subsidiary Dragonair will be joining as an affiliate member of Oneworld later in the year, the China market will be well covered until a member from within mainland China is brought in.
China Eastern has for some time been seeking a foreign investment partner and it is in late-stage talks with SIA, which together with Singapore government investment arm Temasek Holdings is widely expected to take a stake of up to 25%. Chinese government approval is currently being sought.
Fast-growing Chinese carrier Hainan Airlines has also expressed interest in joining Oneworld and McCulloch says that "we will continue to talk with them".
"Hainan is an airline we have had contact with," he says, but "our focus is obviously on the remaining major carrier that is unaligned".
Oneworld is also continuing to monitor developments in the fast-changing Indian market, where consolidation has begun to take place after several years of phenomenal growth following the establishment of new domestic carriers.
McCulloch says: "It is a huge market. It is a major target and focus for us. But we think that it is going to take a couple of years for it to consolidate to the point where the right decision can be made.
"Our view is that the market will consolidate to three or four major players with a domestic and international network, [which will provide] "fertile ground" for the world's major alliance groupings.
"Nothing is going to become clear for a number of years," he says.
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Source: FlightGlobal.com
