HONG KONG- Air China (AC), presently holding a 30% stake in Cathay Pacific (CX), is contemplating acquiring a controlling stake in the Hong Kong-based airline.
This move by the Chinese flag carrier, a member of the Star Alliance, has the potential to trigger a significant shift in global airline alliances, transitioning Cathay Pacific from the Oneworld Alliance (with members like American Airlines and British Airways) to the Star Alliance, which includes United and Air Canada, reported Viewfromthewing.
Cathay Pacific to Leave Oneworld Alliance
Speculation has persisted regarding Cathay Pacific’s possible move to the Star Alliance, with the anticipation that China Southern, co-owned by American Airlines (AA) and Qatar Airways (QR) [with Qatar holding a 10% stake in Cathay Pacific], could replace it in oneworld.
However, discussions about the status of China Southern were postponed due to the pandemic, and American Airlines had already devalued its investment by 25% even before that.
In the past, Cathay Pacific has been recognized for its high-quality service and has served as an excellent option for award availability for frequent flyers in the oneworld alliance.
Their prestigious Wing and Pier lounges in Hong Kong extended access to the first-class sections for oneworld emerald frequent flyers. However, if Cathay Pacific were to shift to the Star Alliance, a similar accommodation for Star Alliance Gold members may not be guaranteed.
Lately, securing award space on Cathay Pacific has become challenging, given the airline’s gradual resumption of services, with a particular emphasis on connecting traffic between Hong Kong and China.
Pressure from Mainland China
Hong Kong has faced difficulties not only due to pandemic-related restrictions but also civil liberties constraints following mainland China’s national security crackdown in 2019, which included disregarding its commitment to the rule of law for Hong Kong outlined in the 1984 Sino-British Joint Declaration.
Interestingly, Gary Leff writes that “Do You Hear the People Sing” is prohibited in China. Simultaneously, during mainland China’s crackdown on Hong Kong, affecting its status as a global financial hub, the CEO of Cathay Pacific was compelled to step down.
Although there were recent discussions about fostering stronger connections between Cathay Pacific and American Airlines, both American and Cathay encounter constraints, including code-sharing limitations, owing to continued restrictions on Russian overflight arising from Russia’s invasion of Ukraine.
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