British Airways signed (07-Sep-2010) a codeshare with Kingfisher Airlines for services across India, Sri Lanka, the UK and continental Europe, effective 15-Sep-2010. This is the first time that BA has codeshared with an Indian airline. BA’s code will be placed on 11 domestic Indian routes and one route to Sri Lanka operated by Kingfisher while Kingfisher's code will be placed on nine BA routes from Heathrow to the UK regions and continental Europe. This follows Kingfisher Airlines acceptance of an invitation to join the oneworld alliance earlier this year. British Airways is supporting Kingfisher through its alliance implementation process as its oneworld sponsor. [more]
British Airways signs codeshare with Kingfisher
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British Airways-Qatar Airways form Europe's first Gulf airline JV, showing some oneworld flexibility
British Airways and Qatar Airways are to commence a revenue-sharing joint venture from 30-Oct-2016. Even before Qatar Airways took 20% of the equity of BA parent group IAG, the JV was expected – and perhaps due earlier. The agreement includes the UK, continental Europe, Asia, Middle East and Africa – essentially all regions but the Americas. Some specifics and regulatory matters are to be worked through, and Iberia is excluded but presumably will be added.
oneworld has always been a flexible congregation of bilateral relationships, but nowhere has this been better exemplified than with Qatar Airways' membership of oneworld and eg Qantas' deep partnership with Emirates. The BA-QR JV is the first between a European airline and a Gulf airline. Compared to AF-KLM and Lufthansa, BA/IAG have been more open towards Gulf airlines, a result of management but also pragmatism: BA's hub at London Heathrow is capacity constrained and BA typically carries a majority of O&D passengers.
Chinese long haul secondary city air routes: BA's Chengdu exit does not reflect the broader market
The fastest long haul airline growth is not occurring with Gulf airlines but rather, with services to and from secondary Chinese cities. It is not a secret that local incentives and subsidies, generally common in any market, are especially large in price and duration for secondary Chinese cities. An airline might expect over a third of revenues to be subsidised. This drastically alters the business case in a low-margin industry, hence the proliferation of secondary city services. This extreme dependence on subsidies raises the question of how long governments are willing to issue generous subsidies, and how many routes can be sustainable without them.
British Airways' decision to exit its only secondary Chinese route to Chengdu, in Jan-2017, might suggest the music is ending and the secondary long haul bubble is popping. There is added colour given the recent UK-China air service agreement expansion, and Brexit/British pound depreciation overhangs.
BA's exit does confirm market fundamentals: secondary city yields are low, and some routes are ahead of their time. Yet a number of factors unique to British Airways suggest caution in concluding that BA's Chengdu exit could foreshadow other withdrawals.