Juneyao Airlines expands Star presence in Shanghai

by DOMINIC LALK  

November 1st 2016

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Star Alliance and Juneyao Airlines have formally sealed a strategic partnership which will see the Shanghai-based carrier become a “Connecting Partner (CP)” of Star Alliance, “hopefully before April 2017,” the airline newlyweds told Orient Aviation at a ceremony at Shanghai’s iconic Jin Mao Tower last month. Read More »  

The tie-up will allow Hongqiao-headquartered Juneyao to offer services such as through-check-in, lounge access and additional baggage allowance to qualifying passengers traveling on connecting itineraries with Star carriers, including Air China, Air India, Air New Zealand, All Nippon Airways, Asiana Airlines, EVA Air, Shenzhen Airlines, Singapore Airlines and Thai Airways International.

“Shanghai did present a significant gap for us, so Juneyao is a terrific addition to our network proposition in China and particularly in Shanghai,” outgoing Star Alliance CEO, Mark Schwab, said.

Seventeen Star carriers operate close to 1,600 weekly services in and out of Shanghai’s two airports, Pudong International and Hongqiao International, and Juneyao serves both of them. With a fleet of 56 aircraft, it flies 1,700 flights a week to 69 destinations in eight countries and “regions” – the Mainland’s description of Hong Kong, Macau and Taiwan.

“We will offer 53 additional routes that will complement Star Alliance’s existing services from Shanghai and attract more connecting passengers to our two home hub airports,” said Juneyao’s chairman, Wang Junjin.

Juneyao’s marriage with Star potentially provides access to 1,300 airports served by the alliance’s carriers, while significantly increasing its chances of success when it launches long-haul operations with ten B787s from 2020. For Star and Air China, Shanghai-based Juneyao gives them a bigger presence in China’s key financial hub dominated by SkyTeam’s China Eastern Airlines.

Star took a big hit in 2010 when Shanghai Airlines left the alliance after it was taken over by China Eastern. Analysts have predicted Star could feed up to 2,000 more passengers a day into Juneyao’s network, which will generate an extra $20 million in annual revenue, numbers that in the long-term outweigh the costs of becoming a Star CP, particularly with regards to IT integration issues. “Their platform here is Travelsky. We’ve done integration with Travelsky before, so all sides know how it works and there shouldn’t be any big problems,” Schwab said.

“A full member needs to have full commercial relationships with all members of Star Alliance,” Schwab said, while “as a CP, that carrier only needs to establish commercial relationships with airlines that make sense, in this case airlines flying to China, so that in itself creates a significant difference in the cost of integration.” The Frankfurt-headquartered airline grouping has been investing heavily in building new technology to make the customer proposition easier.

Schwab told Orient Aviation that negotiations between the alliance and Juneyao had been on-going for three years, “right as we welcomed EVA Air to the family in 2013”, adding he was “impressed by the carrier’s professionalism and operational efficiencies” from the beginning of their discussions.

Star launched the CPM model last December in partnership with South Africa’s Mango Airlines, but slower-than-expected necessary technological and commercial links, paired with a leadership change at the low-cost-carrier, put the brakes on implementation.

Schwab said the alliance was in negotiations with “a handful” of other airlines about joining as CP members, “although not in China [or Australia]”. “I don’t think there’s an obvious candidate there,” Schwab said. Orient Aviation understands Air India Express and Thai Smile Air could be the next CP Star partners.

Schwab will retire in January and be succeeded by Star COO, Malaysian-born Jeffrey Goh.