IATA AGM: Oneworld looks to overcome China Eastern disappointment

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The oneworld alliance is reviewing its strategy for the mainland China market after failing to get one of the country's three main airlines to become a partner.

Shanghai-based China Eastern Airlines opted for the SkyTeam alliance in April despite being wooed by oneworld and Star Alliance. It joins Guangzhou-based China Southern in SkyTeam, while the country's flag carrier Air China is with Star.

Observers believe that China Eastern's decision was primarily a strategic one. It hopes to entrench its co-operation with China Southern as they compete against Air China, which is expanding rapidly by buying smaller Chinese carriers and setting up bases in large cities like Shanghai where it previously did not have a major presence.

Hainan Airlines, China's fourth largest carrier, has been mentioned as a possible oneworld member in the future. But John McCulloch, the alliance's managing partner, says that oneworld is not in negotiations with Hainan and is instead considering its options for the country.

 © Airbus

"China is obviously a big market, and we are disappointed with China Eastern's decision as we believe that we offered them best commercial deal among all the alliances," says McCulloch.

"We are not in talks with any other Chinese carrier - none of the other airlines offer the type of connections that one of the big three would bring to the table. So we have to see what our strategy will be for the future."

One option for the alliance is to leverage on the existing strengths of current oneworld members, and build that up gradually in the near term, he adds.

"What we have to also understand is that oneworld was already well positioned in the Chinese market before China Eastern's decision," says McCulloch. "We already have strong connections to China through our existing partners like Cathay Pacific, with its hub in Hong Kong, and its subsidiary Dragonair. Similarly, Japan Airlines has great schedules into China. We will look to build on that in the coming months."