Should China Southern join oneworld? Part one

Is alliance membership a good fit for the Chinese mega-carrier?

The Guangdong-Hong Kong-Macao Greater Bay Area (GBA) is one of the most exciting aviation regions the world right now. 90 million people live there and many are prosperous, fuelling demand for travel and premium cabins.

GDP per capita in the GBA exceeds CNY 158k (USD 22.1k, GBP 17.3k), nearly twice the average for mainland China. The region contains nine mainland Chinese cities, two Special Administrative Regions (Hong Kong & Macao) and seven airports. Eight Chinese airlines and a cargo carrier hub at these airports.

This is the third article in our GBA series. The first looked at Cathay Pacific (see article) and the second Hong Kong Airlines (see article). Today we consider whether or not China Southern (CZ), the region’s most important carrier, should join the oneworld alliance.

This would give China’s three largest airlines membership of every alliance between them. Air China is in Star Alliance and China Eastern is in Skyteam, the alliance which CZ used to be a member of.

This is a big question as CZ is a big airline. It’s fleet, network and product are extremely complex.

I am grateful to Zara Stellwag, a student, who helped me put together the research. Thanks Zara!

This article explains how CZ is put together, outlining their network, fleet and commercial product. Next week’s article will answer five questions.

1. Which oneworld airlines does CZ connect with and are these connections high quality (i.e. not too long)?

2. Which oneworld airlines does CZ not connect with?

3. Would CZ’s membership of oneworld cause any issues for other Chinese airlines?

4. Would CZ’s membership of oneworld abstract revenue away from Hong Kong-based oneworld member Cathay Pacific, or any other oneworld members?

5. Is China Southern’s product and service aligned with oneworld brand values?

China Southern’s fleet & network is complex

Like key European and North American airlines, CZ has many hubs and focus cities.

The annual report states that there are two hubs, Beijing and Guangzhou, but their network has many more hub-like airports. Their two hubs and major focus cities from which many flights originate are:

1. Guangzhou Baiyun Airport (CAN) – the main hub, serving the largest city in the GBA with around 20 million residents, an ancient silk road terminus and all-round important Chinese mega-city

2. Shenzhen Bao’an Apt (SZX) – the R&D and business hub next to Hong Kong

3. Beijing Daxing Apt (PKX) – the second hub, one of two international airports serving China’s capital city

4. Shanghai Pudong Apt (PVG) – one of two airports serving the trading hub of Shanghai, with 27m+ residents China’s largest city

5. Wuhan Tianhe Apt (WUH) – the center of central China with 12m+ residents

6. Urumqi Diwopu Apt (URC) – gateway the mighty Taklamakan desert, central Asia & cities of northwest China, the airport of the ‘belt’ part of China’s Belt & Road programme (see article).

There also appear to be a number of other focus cities, including:

7. Hangzhou Xiaoshan Apt (HGH) – the ancient centre of the Yangtze River delta, famous for it’s beautiful West Lake

8. Chongqing Jiangbei Apt (CKG) – serving more than 32 million people

9. Hohhot Baita Apt (HET) – serving Inner Mongolia

10. Tianjin Binhai Apt (TSN) – serving Tianjin, another megalopolis just south east of Beijing

Here they all are on a map, with 200 mi circles for scale. All maps in this article were produced with the excellent Great Circle Mapper, an essential tool for anyone interested in airlines.

From these airports China Southern operates an incredible 6,147 flights per week, each way, this summer (week of 16- to 22-Jun-2024).

The fleet is remarkably complex, with many sub-fleets. It is hard to judge exactly which aircraft is deployed where at which time. I used averages based on aerolopa.com data, as shown in the table below.

My model based on an average capacity per aircraft type suggests that every week CZ has more than 50.7k business class seats and 1.11 million economy and premium economy seats. Each way – that’s around 638,560 flights a year, 5.3 million business class seats and 115 million economy seats!

This squares somewhat with the annual report. In 2022, during COVID, the airline apparently had 62.6 million passengers at 66.3% load factor, implying around 94 million seats.

The increase to ~120 million seats for 2024 suggested by my analysis, if accurate, could be explained by new aircraft deliveries and higher aircraft utilisation. I think this is plausible.

Let’s start with the international network

I found 594 flights a week to 57 international destinations. These are summarised in the maps and charts below

Five destinations start at one of CZ’s key cities and move through another Chinese city before crossing the border. From Guangzhou these are Luxembourg via Zhengzhou, Nairobi via Changsha, Baku via Urumqi and San Francisco via Wuhan. Islamabad from Urumqi operates via the oasis silk road town of Kashgar. To be honest, I am not sure why.

International services from Guangzhou have slightly more business class seats than flights (65.2% of international business class seats, 63.5% of international flights).

The average aircraft operating from Beijing is larger than elsewhere. Beijing flights in my model have 19.9 business and 243.0 economy class seats per flight. The international network average for other destinations is 11.7 and 198.4 respectively.

The domestic network is huge

I found 87 direct destinations, plus the 10 hubs and focus cities. There may be more I have missed - if there are, it will make no real difference to the question of should China Southern join oneworld. Better to be roughly right than precisely wrong. I have included Hong Kong and Taiwan in the domestic network.

I also found an additional 57 connecting routes, with 328 flights, 1659 business class seats and 53,210 economy class seats a week, each way.

The connecting routes are shown in the five maps below.

Now let’s consider the main domestic network excluding connections and also excluding travel between hubs and key cities. I found 4,497 flights, 31,256 business class seats and 778,145 economy class seats per week, each way. The split between city origins and regions is shown in the charts below.

The maps below show the 36 routes which operate only from one CZ city.

14 destinations are served from two CZ cities:

When it comes to destinations served from three or more CZ cities, counting for 4,483 flights per week each way, maps start to get a bit messy and a table is more helpful.

I am also presenting the 1,056 flights per week each between the main hubs and focus cities as a table.

Across CZ’s network, 14.7% of flights are to the same destinations as Cathay Pacific. These represent 20.2% of CZ’s business class seats and 16.4% of CZ’s premium economy and economy class seats. Since whether or not CZ would abstract revenue from Cathay Pacific in the event of joining oneworld, I will be coming back to this table in more detail next week.

A few notes on CZ’s commercial product

I flew the CZ B787-8 (B-2735) and A330-200 (B-5951) to Australia in 2019 and it was good. The business class return fare was £4,706 ($5,970, CNY 42,990) and the service was excellent. On my outbound flight the crew all called me “honourable passenger 奥力吾” (Ao Li Wu) and served up decent pork ribs.

I also flew CZ B737-800s (B-5717 & B-1155) to Guiyang for an Airbus event. I was impressed that when flying business class my bags came out first. Not near the front, but first. Take note British Airways!

There was an impressive fruit plate and a constant flow of 可口可乐 (Ke-Kou-Ke-Le, literally “delicious drink”, i.e. Coca-Cola!)

Seeing a three cabin service with business, premium economy and economy on a single-aisle was impressive. The Chinese market is growing and premium cabins are important. Western airlines, analysts and suppliers used to a widespread but wrong industry trope that passengers only care about ticket price should take note.

oliver AT ransonpricing DOT com

[IMAGE CREDIT]