Photo/Hua Ang

Jan. 3 (NBD) -- China Southern Airlines Company Limited (China Southern), the country's largest airline by passengers carried annually, announced on Wednesday that Qatar Airways Company Q.C.S.C., Qatar's flagship airline, now holds a 5 percent stake in the Chinese carrier.

According to the announcement, the Doha-based carrier is expected to consider further increasing its holdings in the Guangzhou-based airline in the next 12 months.

Qatar Airways' new move is part of the efforts to improve its operation capability and fortify its network connectivity.

As China's booming tourism industry has injected vitality into the development of the Asia-Pacific market, Qatar Airways' investment in China Southern is aimed at strengthening the former's presence in the area. 

Akbar Al Baker, the chief executive officer of Qatar Airways, said in a written statement that there is "massive potential for cooperation in the future."

"There are opportunities for us to work together and build a long-term relationship in ways that would bring benefits to customers of both airlines,” Al Baker added, noting China’s domestic travel market was "important" to have a foothold in.

Meanwhile, the tie-up signals China Southern's desire of seeking globalization since the air company is not as globalized as two other major airlines in China. 

It is worth noting that before partnering with Qatar Airways, China Southern has cooperated early in 2017 with American Airlines Inc., a member of airline alliance Oneworld which Qatar Airways also participates in, to open more routes to the U.S.

At the same time, China Southern and American Airlines reached agreements to cooperate on code-sharing, multimodal transport as well as check-in and checked baggage procedures.

This leaves the question that whether Qatar Airways' investment in China Southern implies further collaboration in their businesses. The Chinese carrier's managing person told news outlet Yicai the current cooperation is situated at the level of SPA and further cooperation is not on the agenda for now.

According to Lin Zhijie, an insider from the civil aviation industry, despite the appeal from China's enormous air travel market, Qatar's investment in China Southern is more likely to be a financial investment than a strategic one.

Qatar Airways bought shares of China Southern directly from the secondary market, which showed no sign of any agreement having been reached or further cooperation at least for now, Lin Zhijie explained. 

The Doha-based carrier endeavors to carry tourists in China to Europe via Doha so as to build the city into an international hub while the Guangzhou-based carrier also eyes building Guangzhou into a key stopover for intercontinental flights. They are more competitors than cooperators, Lin added.

Noticeably, the tie-up came less than two months after China Southern parted ways with the SkyTeam alliance and Qatar Airways' CEO stated last October the possibility to exit Oneworld.

Several insiders from the civil aviation sector pointed out the influence of aviation alliance on air companies is currently diminishing and there are expected to be more bilateral cooperation and cross holding between airlines, breaking through the restrictions of aviation alliances.

Email: wenqiao@nbd.com.cn