Sunday, September 11, 2011

Is Cathay Pacific Ready to ditch oneworld for Star Alliance?

Before reading my post, please read the following:

Cathay Pacific reported ready to ditch oneworld

I am not an industry insider. However, this topic is so interesting that I have to provide my insight.

It is not going to happen, unless Cathay Pacific is so desperate to get out.

Their first obstacle is the U.S. Department of Justice.

If you travel a lot to Hong Kong, you probably know that the following cities have direct non-stop services from North America to Hong Kong:
  • Toronto (Air Canada, Cathay Pacific)
  • Vancouver (Air Canada, Cathay Pacific)
  • San Francisco  (Untied, Singapore Airlines, Cathay Pacific)
  • Los Angeles (Cathay Pacific)
  • Chicago (United, Cathay Pacific)
  • New York (United/Continental, Cathay Pacific)
  • Detroit (Delta)
This will give you a perfect idea - if Cathay Pacific wants to join Star Alliance (*A), it will be basically a cartel situation, which servicing to Hong Kong will be almost dominated by *A.

Do you really think Delta will stand still and not do anything? How about the Department of Justice?

Basically, Cathay Pacific will have to compromise in order to join *A, liking cutting routes/services.

But here is the issue - who will they give it to?

The only airlines that are capable to run this route are Delta and American Airlines, in which these are the possible replacements (in theory):

  • American - Los Angeles, New York (Cathay Pacific just recently start their service in Chicago, so they will be allow to keep for a while)
  • Delta - Minneapolis (Restore), New York
However, none of them have any extra aircraft to do this route. So?

Back to Square #1.

It will not seem worth the trouble to go with *A.

No offense, oneworld is not as organized as *A, but as the King of Hong Kong, Cathay Pacific does not need to do anything in order to strengthen its position in Asia.

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