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China Airlines, Taiwan’s largest carrier, joins SkyTeam. Big impact in crucial North Asian markets

28-Sep-2011

The SkyTeam alliance has taken another step forward in cementing its place in the fast-growing North Asian aviation market by adding China Airlines, Taiwan’s largest carrier and the world's seventh largest cargo carrier (by international scheduled FTKs - or eighth largest by total system FTKs), to the fold on 28-Sep-2011. China Airlines' entry comes just three months after China Eastern Airlines and Shanghai Airlines joined the grouping in Jun-2011. China Airlines will be the first Taiwanese carrier to join a global alliance, with rival EVA Air remaining unaligned.

China Airlines will become the 15th member of the SkyTeam airline alliance (see Appendix for full list of alliance groupings). By joining SkyTeam, the Taiwanese carrier will expand its international coverage nine-fold via codesharing to 926 destinations in 173 countries across 14,000 services from the current 1010 destinations in 29 countries.

The carrier stated it hopes to reduce operation costs by at least 0.5% or around TWD1 billion (USD32.89 million) in the first year of membership in the alliance. The carrier also expects to boost revenues through enhanced codeshare operations with alliance members. "The ability to make more flexible flight arrangements might bring us TWD1 billion to TWD2 billion in additional revenue during the same period," Chin Airlines President Sun Hung-hsiang said. In addition, Mr Sun stated the carrier would will seek for further cooperation with countries such as Japan, Thailand and Vietnam to extend its cargo flight service in these regions to the United States and European countries.

The Taipei-based carrier stated it has taken 11 years to gain approval from each of the current SkyTeam members to enter the alliance. "The membership will elevate our global presence, especially in the China region," said Jessica Pan, the airline's public relations manager. Commenting on the alliance membership, China Airlines Chairman Chia-Juch Chang stated that joining SkyTeam is "an integral part of our strategy for increased international growth and profitability".

China Airlines brings a surge in connectivity but just three new destinations to the SkyTeam network: Okinawa and Miyazaki in Japan and Surabaya in Indonesia. From its hub in Taipei, one of Asia’s strongest economies, China Airlines operates a diverse passenger and cargo network throughout the wider Asia pacific region, North America and Europe, with a total of 224 daily departures to 80 destinations worldwide, SkyTeam noted.

SkyTeam increases presence in Taiwanese market by over five-fold

By joining the SkyTeam alliance, China Airlines has increased by over five-fold the grouping's share of total weekly seat capacity to/from/within in Taiwan from 6.1% to 31.8%. The next biggest alliance in Taiwan is oneworld (12.2%), as oneworld member Cathay Pacific is the third largest carrier operating in the Taiwanese market with some 89,000 weekly seats.

Around 45.8% of total weekly seats in Taiwan remains unaligned to a global grouping, as Taiwan’s second largest carrier, EVA Air, is not a member of an alliance. 

NB: The colours of the following graphs default to light blue for the largest group, yellow for second largest, green for third, red for fourth and navy blue for fifth.

Taiwan total capacity (seats) share (%) by alliance: Sep-2011

Before

After

   

SkyTeam has gained a major boost at Taipei Taoyuan, Taiwan’s largest airport handling 80.5% of the nation’s international seats and 59.5% of total system seats. SkyTeam’s share of total weekly seats has soared from just 1.5% to 40.6%, with oneworld trailing with a 16.3% share and Star Alliance having only a 1.5% share at the airport. China Airlines is the largest operator at Taipei Taoyuan, with over 206,000 weekly seats at present based on Innovata data, or a third of the total.  

Taipei Taoyuan total capacity (seats) share (%) by alliance: Sep-2011

Before

After

 

SkyTeam's position at Taiwan’s second largest international airport, Kaohsiung, has also increased strongly, from 3.2% to 20.3%. China Airlines is the third largest carrier at Kaohsiung, after TransAsia and Hong Kong-based Dragonair (a Cathay Pacific subsidiary).

Kaohsiung total capacity (seats) share (%) by alliance: Sep-2011

Before

After

   

At Taipei’s second airport, Taipei Songshan, SkyTeam’s presence has increased from 1.8% to 11.0%. Songshan is the nation’s third largest airport, with 7.4% capacity (seats) share and the nation’s second largest airport by system capacity (seats) handling 12.7% of total system capacity. China Airlines is the fourth largest airline at Taipei Sonshan, after UNI Airways (a regional subsidiary of EVA Air), TransAsia and Mandarin Airlines, China Airlines’ regional and domestic subsidiary, but ahead of EVA Air.

Taipei Songshan total capacity (seats) share (%) by alliance: Sep-2011

Before

After

   

SkyTeam the dominant alliance in China, North Asia and Asia Pacific

The impact is not just confined to Taiwan. In China, where SkyTeam was already strong and China Airlines has an enlarged presence thanks to progressive cross-Strait liberalisation, its share has increased slightly from 38.2% to 38.5%. China Airlines complements the network of existing members, China Southern and China Eastern, and offers an extensive cross-Strait network to 20 major destinations in Mainland China. Star Alliance member Air France has previously stated that with the arrival of China Airlines, Shanghai Airlines and China Eastern into the alliance in 2011, a total of 135 destinations will be offered by SkyTeam in Greater China alone.

China total capacity (seats) share (%) by alliance: Sep-2011

Before

After

   

In the crucial North Asian region, SkyTeam has slightly extended its dominance, with its capacity share in the region increasing from 28.3% to 29.9%, ahead of Star Alliance (26.2%) and significantly to oneworld (9.5%).

North Asia total capacity (seats) share (%) by alliance: Sep-2011

Before

After

   

In the wider Asia Pacific market, SkyTeam now commands 19.1% of total capacity (seats), up 1 percentage point and now trails Star by less than one percentage point.

Asia Pacific total capacity (seats) share (%) by alliance: Sep-2011

Before

After

   

The alliances battle for Asia heats up

China Airlines becomes the 15th airline to join SkyTeam, which is expected to grow to 19 members by 2012, with the addition of Garuda Indonesia, as well as Aerolineas Argentinas, Saudi Arabian Airlines and Middle East Airlines. Xiamen Airlines has also formally submitted an application to SkyTeam Alliance. The carrier, a subsidiary of China Southern Airlines, has received unanimous approval from the SkyTeam Alliance Council, with the alliance to now form a project team to work with the Chinese carrier over the next 12 months to ensure the carrier satisfies all requirements prior to joining. Xiamen Airlines is expected to formally join the alliance in late 2012 to mid-2013.

A fascinating battle between the two alliance heavyweights, Star and SkyTeam is set to unfold in coming years, though oneworld is fighting back with its own list of future members, including Kingfisher and Malaysia Airlines.

APPENDIX:

The second largest of the three major alliances, SkyTeam has 15 members, including Aeroflot, Aeromexico, Air Europa, Air France, Alitalia, China Eastern, China Southern, Czech Airlines, Delta Air Lines, Kenya Airways, KLM, Korean Air, TAROM and Vietnam Airlines, operating to 168 countries and regions.

Oneworld

SkyTeam

Star Alliance

Alliance members

   

American Airlines

British Airways

Cathay Pacific

Finnair

Iberia

Japan Airlines

LAN

Malev Hungarian Airlines

Qantas

Royal Jordanian

S7 Airlines

Aeroflot

Aeromexico

Air Europa

Air France

Alitalia

China Airlines

China Eastern Airlines

China Southern Airlines

CSA Czech Airlines

Delta Air Lines

Kenya Airways

KLM Royal Dutch Airlines

Korean Air

Shanghai Airlines

Tarom

Vietnam Airlines

Adria Airways

Aegean Airlines

Air Canada

Air China

Air New Zealand

ANA

Asiana Airlines

Austrian Airlines

Blue1

bmi

Brussels Airlines

Continental Airlines

Croatia Airlines

Egyptair

LOT Polish Airlines

Lufthansa

Scandinavian Airlines

Shenzhen Airlines

Singapore Airlines

South African Airways

Spanair

SWISS

TAM Airlines

TAP Portugal

Thai Airways

Turkish Airlines

United Airlines

US Airways

Pending Members

   

Air Berlin

Kingfisher Airlines

Malaysia Airlines

Aerolineas Argentinas

China Airlines

Garuda Indonesia

Middle East Airlines

Saudi Arabian Airlines

Aerolineas Argentinas

Xiamen Airlines

Ethiopian Airlines

Avianca-TACA

Copa Airlines


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