Cathay Pacific and Singapore Airlines cautiously welcome new hubs as Qatar & Turkish enter the fray


The legacy airline pivot towards the world's new network carriers is taking quiet but potentially significant strides in Asia: Cathay Pacific is to partner with oneworld Qatar Airways; Singapore Airlines expands its partnership with fellow Star Alliance member Turkish Airlines.

Cathay and SIA, Asia's two benchmark carriers, have generally been resolutely independent, an approach that worked in their heyday but now shows limits as competition mounts. The driving strategy is succinctly described by SIA in a statement about growing its partnership with Turkish: "We can jointly do more together than we could each do on our own" - the whole is greater than the sum of the parts.

Those are powerful words, perhaps unimaginable a few years ago for SIA. But to be clear, these fall far short - at least for now - of the landmark agreements between Qantas and Emirates, or Etihad and Air France. The partnerships are young and any growth will take time to build, from beyond destination access to codeshare rates that determine how much traction these alliances will have. Etihad-Air France at 18 months old is still being defined, so these first steps from Cathay and SIA are important, even if the path ahead is long.

  • Cathay Pacific is partnering with Qatar Airways, while Singapore Airlines is expanding its partnership with Turkish Airlines, as legacy airlines in Asia seek to compete with the new network carriers.
  • Asian airlines have had limited partnerships with Gulf airlines, but the need to partner with a Gulf carrier has been less pressing in Asia than in Europe.
  • Gulf carriers have impacted Cathay Pacific and Singapore Airlines, but the response has been more muted compared to European carriers.
  • Cathay Pacific is taking over one of Qatar Airways' Doha-Hong Kong flights and has implemented codeshares on Qatar's services from Doha to Athens and Geneva.
  • Qatar Airways' partnership with Cathay Pacific marks its first strategic partnership with a oneworld carrier since joining the alliance.
  • Singapore Airlines and Turkish Airlines are expanding their partnership, with SIA increasing capacity on the Istanbul-Singapore route and both carriers codesharing on each other's flights.

Asian airlines have had limited partnerships with Gulf airlines

Partnerships between Asian carriers and Gulf network carriers are more limited than in Europe, although it has only been very recently that partnerships between European carriers and Gulf carriers have deepened. While Turkish Airlines is not strictly a Gulf carrier, its geography is proximate and it shares many similarities with Gulf carriers.

Notable differences are that Turkish has a domestic market, unlike Emirates, Etihad and Qatar, and its geography has operational impacts: Turkish cannot sustainably serve Australia non-stop with its existing fleet, but can serve most of Europe with narrowbody aircraft while North America can be served with mid-range widebody aircraft, unlike Gulf carriers.

The need to partner with a Gulf carrier has been less pressing in Asia than Europe, where short-haul has been decimated by LCCs while Gulf carriers win traffic to Africa, Asia, Australia and the Middle East - a wide swathe of the world. For Asian carriers, the impact of Gulf carriers is felt mainly to Europe, between Europe and Australia, and the smaller Middle East market. Smaller impacts have also been felt to Africa and North America. Intra-Asia conditions are challenging depending on the market, but overall they are better than in Europe.

Global marketing alliances - oneworld, SkyTeam and Star - have not necessarily been a limiting factor. (Star is most adamant about preventing its members from partnering with Gulf carriers.) Indeed, partnerships in Asia have been fluid. Oneworld's JAL still maintains its longstanding close ties to SkyTeam's Air France. It was only in recent years Star's Air New Zealand switched Japanese partners from JAL to fellow Star carrier ANA. SkyTeam's KLM partners with oneworld's Malaysia Airlines, to name a few examples.

There have been some Asian-Gulf partnerships, but numbers were limited. Emirates partners with JAL for access to the domestic market, Emirates used Philippine Airlines' traffic rights for Manila-Dubai services, Etihad has very basic partnerships with China Eastern and Hainan Airlines, and Etihad has also partnered with Garuda, although this arrangement seems to be waning.

Gulf airlines have impacted Cathay and SIA, but the response is publicly muted

Gulf carriers have undeniably impacted Cathay Pacific and SIA, but the two have not levelled anti-Gulf carrier calls the way other European carriers so publicly and ferociously denounced those airlines. Cathay and SIA prefer to be low-key organisations where the fight is undertaken quietly and not through headlines. Indeed, partnerships like Air France-Etihad were so momentous because of the denouncements in the past.

SIA has suffered a greater impact from Gulf carriers. Transiting from Singapore (or its core Southeast Asia source market) to a Gulf hub is less circuitous than from Hong Kong or one of Cathay's large North Asian source markets.

Gulf carriers also have a larger presence in Singapore and across Southeast Asia than in Hong Kong and wider North Asia. It was only in 2013 Etihad gained a presence in Hong Kong when partially-owned subsidiary Air Seychelles launched Mahe-Abu Dhabi-Hong Kong services.

Gulf carrier Asia-Gulf* one-way seat capacity in Singapore and Hong Kong: 17-Mar-2014 to 23-Mar-2014


Hong Kong













Gulf carrier one-way seat capacity in Southeast Asia and North Asia: 17-Mar-2014 to 23-Mar-2014

Southeast Asia

North Asia













SIA has also been impacted by Singapore-Australia services offered by Emirates and Etihad with local pick-up rights.

SIA has more to lose owing to its network of 13 European destinations and 32,000 weekly one-way seats to Cathay's smaller seven destinations and 20,000 weekly seats. However, Cathay has arguably foregone many opportunities; Emirates' top five connecting markets from Hong Kong are London, Manchester, Birmingham, Paris and Milan, according to estimates from Amadeus Air Traffic. All but Manchester and Birmingham are Cathay destinations (Cathay is rumoured to introduce a Manchester service with A350s).

The South China Morning Post cited Amadeus figures that non-stop passengers from Hong Kong to 10 European cities dropped 3.2% to 822,433 in 2013 compared to 849,885 in 2012. Those flying via Abu Dhabi, Dubai or Doha increased from 21% in 2012 to 24% in 2013.

Partnering with Qatar and Turkish is not just about the rise of the Gulf. The two new hub carriers offer an opportunity to further compete with other European carriers and their large networks, such as Air France-KLM and Lufthansa, which is not close to SIA despite the Star linkage.

See related report: Singapore Airlines is falling behind Cathay Pacific as Asia's network airline giants diverge

Cathay takes over one of Qatar's Doha-Hong Kong flights; European codeshares initiated

At present, the Cathay-Qatar partnership looks deeper than SIA-Turkish. Cathay at the end of Mar-2014 will take over one of Qatar's two daily Doha-Hong Kong A330-200 flights (CX645/CX640). Cathay will use an A330-300, although Cathay offers premium economy whereas Qatar does not.

Cathay Pacific and Qatar Airways joint Hong Kong-Doha schedule: 30-Mar-2014

Cathay and Qatar have not offered any further enlightenment about this partnership, but there would have to be closer arrangements than the low key announcement suggests; Hong Kong-Doha is a much smaller market than Singapore-Istanbul (which SIA has been flying).

Qatar can continue to sell two daily flights, but even if Cathay used its network to feed Doha, it would need beyond gateway access.

Indeed, it seems gateway access is on the agenda as Cathay has implemented codeshares on Qatar's services from Doha to Athens and Geneva. However, these are currently only being sold on the most flexible (and expensive) tickets, suggesting the arrangement is not yet ready for prime time.

It can be difficult to draw inferences about very limited onward destinations. Neither Geneva nor Athens have handsome traffic flows, and while they are some of the popular onward destinations for Emirates and Air France, they are not the most trafficked. Cathay serves Athens and Geneva offline via British Airways connections at London Heathrow, where Cathay flies up to five times daily.

While there is a degree of backtracking in a Heathrow connection, connecting in London is faster than Doha to reach Geneva. However, a London connection only permits a mid-morning arrival in Geneva whereas a Doha connection allows an early morning arrival. Athens can be reached faster via Doha than London.

So there is scope for Cathay to benefit in some parts of Europe from Qatar. A London connection holds many benefits. Cathay would likely capture more of the revenue, and with up to five daily flights has a number of options.

Cathay is taking over Qatar's flight that arrives in Doha in the late evening. This connects, based on 07-Apr-2014 schedules, within three hours to only five Qatar European flights: Milan, Paris, Zurich, Munich and Rome. Qatar's main European departure bank, from 06:45 in the morning to 08:40, sees service to 21 European flights. This bank is better served from the Hong Kong-Doha flight Qatar will still operate.

However, on the return leg, Qatar's main arriving bank from Europe connects better with the Doha-Hong Kong flight Cathay will operate, suggesting that the two will likely have to have close cooperation to maximise transfers.

Europe is likely not the end game. Qatar also presents possible options for the Middle East, which Cathay has served surprisingly extensively, largely in part due to migrant worker flows from the Philippines. However, this segment is being challenged by Cebu Pacific's Middle East flights and a large increase of capacity in the Philippines from Gulf carriers. Cathay has already re-structured its Middle East network and could possibly look for synergies with Qatar Airways.

See related report: Cathay Pacific consolidates Middle East network as competition grows in local and source markets

There could also be options for Africa, where Qatar has a large if quiet network. On Africa-Asia, and Africa-China routes especially, traffic flows are not insignificant but are dispersed outside of Johannesburg (which Cathay serves daily). That necessitates a hub to serve smaller African points, which Johannesburg can only partially do due to partners and geography. Doha presents a solid option, and could let Cathay and Qatar combine Cathay's North and Southeast Asian strength with Qatar's African strength. The two would have traffic flows they otherwise could not obtain.

This also gives Cathay a sustainable option for greater African services at a time where Chinese interest in Africa is growing fast and will likely result in more Africa-China routes from Chinese carriers. While the routes may be challenging in terms of profits, their mere existence, regardless of profits, pose some impacts.

In return Qatar could gain offline access to much of Asia, and especially China where Cathay/Dragonair serve a multiple of points as Qatar. However, third-country codeshares are not easy in Hong Kong whereas Singapore is more liberalised. Onward markets behind the Chinese gateway could also pose regulatory challenges for Qatar; China's attitude to third-country codeshares remains less than liberal.

Cathay Pacific and Qatar Airways destinations in select markets: 16-Mar-2014

Cathay Pacific

Qatar Airways










Middle East



Cathay partnership is Qatar's first strategic one since joining oneworld

The Cathay partnership marks Qatar's first strategic partnership with a oneworld carrier following its Oct-2013 admission to membership in the alliance.

Qatar has previously only implemented codeshares, although some (such as with American Airlines) have been extensive. But even in the Qatar-American partnership, it is a codeshare arrangement without a strategic element; American does not fly to Doha the way Cathay will.

Qatar is likely to pursue additional strategic partnerships. The most likely - indeed, perhaps all but guaranteed - is with IAG and its British Airways unit. IAG sponsored Qatar's entry to oneworld, and IAG CEO Willie Walsh was a vocal proponent in addition to being close to Qatar CEO Akbar Al Baker.

The possible options are many, and BA has mooted the possibility of changing the stopover of its Sydney flight from Singapore to Doha in order to tap into Qatar's feed. In turn, Qatar would gain access to Sydney. Qatar currently only serves Melbourne and Perth in Australia.

Other partnerships are possible, but it is a crowded field. JAL partners with Emirates while American may also grow closer to Emirates.

SIA expands Turkish Airlines partnership, but details are scarce

Singapore Airlines and Turkish Airlines are already partners, but only on a limited scale: the partnership is confined to reciprocal codesharing on the Istanbul-Singapore route, which SIA serves four times weekly with 777-200ERs and Turkish serves daily with A330s (with onward service to Jakarta). The codeshare in particular helps SIA sell a daily service, although a sample of itineraries shows the codeshare flights for each carrier are significantly more expensive than a ticket using each carrier on their own code.

Under the expanded partnership, SIA from 30-May-2014 will increase capacity to seasonal six weekly flights and each carrier will codeshare from the other's hub. A statement says SIA will place its code on Turkish's destinations to Africa, Europe, the Middle East and North America while Turkish will codeshare on SIA's flights to Southeast Asia and Southwest Pacific (Australia and New Zealand).

Specific destinations were not named, and the devil will be very much in the details - where codes are placed and what the codeshare rates are; they may prove prohibitively expensive.

SIA has a growing number of strategic partnerships, but generally with airlines with smaller international footprints: Air New Zealand (pending regulatory permission), Gol, SAS and Virgin Australia. Three of those carriers - Gol, SAS and Virgin Australia - do not serve Singapore. Working with smaller carriers and those that are largely non-competitive provides comfort and possibly tips the scale of benefit into SIA's favour. SIA has yet to grow close with a sizeable carrier.

SIA had a partnership with SWISS, but once SWISS resumed Singapore services, SIA did not place its code on SWISS' Zurich-Singapore flight, although SIA's Singapore-Zurich flight continues to carry the SWISS code. Ethiopian Airlines faced difficulty securing its partnership with SIA.

Turkish may provide more comfort to SIA than Lufthansa, even if Turkish is larger in Southeast Asia (about 19,000 weekly seats) compared to Lufthansa (17,000). Lufthansa's only codes beyond Singapore on SIA are to Australia and New Zealand; Turkish is also due to code on Southeast Asian routes. The partnership is also wider at the European end: from Frankfurt SIA only codes on Lufthansa's European flights, but from Istanbul SIA plans to code also to North America, the Middle East and Africa.

Exact details are still scarce, but there seems to be logic in selection of the markets: Turkish Airlines does not yet serve Australia or New Zealand (it has mooted Australia but repeatedly pushes it back, in part because the one-stop nature makes it less attractive) while there are many smaller Southeast Asian destinations Turkish cannot serve. This could however all change if - more probably when - Turkish decides to acquire A380s.

North Asia was not mentioned as a beyond market from Singapore for Turkish, and Turkish has struggled to secure additional access to China, although Istanbul-Singapore-China services would probably be too circuitous.

From Istanbul, SIA gains more access to Europe and possibly better codeshare/interline rates than Lufthansa supplies, although handing passengers over at Frankfurt instead of Istanbul allows SIA potentially to capture a larger share of revenue.

SIA has limited options to serve North America since it cannot offer non-stop flights sustainably, being forced to rely on one-stop options, predicated on fifth freedom rights, which are difficult to expand.

In the long term, however, SIA's JV carrier in India could serve North America, giving SIA additional options.

The Middle East (likely more West Asia destinations than Gulf) and Africa see limited services from SIA, so Turkish brings potential additional options.

Singapore Airlines and Turkish Airlines destinations in select markets: 18-Mar-2014

Singapore Airlines

Turkish Airlines










Middle East



North America



Turkish's SIA partnership follows a terminated Lufthansa deal

The announcement of an expanded partnership between Turkish and SIA follows Turkish and Lufthansa not only ending discussions about a partnership but Lufthansa's Nov-2013 moves to dissuade its frequent flyers from travelling on Turkish. Turkish had become too powerful in Lufthansa's backyard.

See related report: Lufthansa ends codesharing with Turkish Airlines. A full rift would mean new strategies for each

But the Turkish-SIA partnership is different. Turkish gets access to Australia and New Zealand, which Lufthansa does not serve, while Lufthansa and Turkish Airlines would have brought limited additional Southeast Asian cities to each other.

Measured steps are the mantra of Cathay and SIA, and the right approach for their new partners

The partnership moves by Cathay and SIA are not the landmark agreements like the Qantas-Emirates partnership that was so disruptive. Even Etihad and Air France are ramping up much more cautiously and progressively.

Measured steps are the mantra of Cathay and SIA, and are likely the right approach as they welcome new hubs. There are benefits to be had, but there is also risk of impacting what is good or making unfavourable concessions.

The Qantas-Emirates partnership was in some ways easier since Qantas largely had a discrete source market (Australia) whereas Cathay and SIA need to consider the impact of their partner across the region to points they can sell.

Cathay and SIA are also very protective of their brands and service, and will be that much more cautious about embarking on a major partnership with another carrier. The concern is not necessarily that the partner is inferior, but more that the partner is different.

These partnerships are at an early stage, and the SIA-Turkish one in particular is subject to a number of caveats over how practical it is. But regardless, these will likely be the first of further partnerships in Asia and can act as a guide for other carriers; ANA has mooted serving Istanbul.

The challenge is not to surrender an old hub but blend it with a new one. With time, and likely a few false starts, Middle East hubs will prove as intriguing to Asian carriers as they have for other regions. And in turn, Asian hubs will evolve too.

Want More Analysis Like This?

CAPA Membership provides access to all news and analysis on the site, along with access to many areas of our comprehensive databases and toolsets.
Find Out More