Star Alliance, the world's largest airline grouping, has added yet another new name to those it is working with when yesterday Air China Ltd signed a Memorandum of Understanding (MoU) with it. ???

 

The nation's flagship carrier is the second Chinese airline in less than two weeks to announce plans to join up.

 

"With Air China choosing to join us we've now taken the decisive step in implementing our strategy for the Chinese market," said Jaan Albrecht, CEO of Star Alliance. "This decision truly lays the foundations for the future pace of Chinese aviation."

 

Star Alliance and Shanghai Airlines on May 10 signed a similar MoU under which the alliance assists airlines in sharing information with other carriers. An example of this could be in ticketing systems. It normally takes 12 months for an airline to complete the technical procedures to become a formal member of the alliance.

 

The membership of Chinese airlines is expected to be a strong boost to Star Alliance's expansion as it allows other member airlines to extend their networks in China.

 

"In the old days airlines competed against each other," said Wolfgang Mayrhuber, CEO and chairman of Deutsche Lufthansa AG. "Today the competition is still there but it's now a competition between airline alliances." Lufthansa is a founding member of Star Alliance.

 

"The 18 members of Star Alliance will enjoy the benefits of being connected to Air China's growing network, which is obviously very strong in China and Asia," said Mayrhuber.

 

As an example Lufthansa is currently only allowed to fly to three Chinese mainland cities -- Beijing, Shanghai and Guangzhou. But with Air China joining Star Alliance the German carrier would be able to sell tickets for passengers flying from Frankfurt to Wuhan in central China's Hubei Province. Air China would carry Lufthansa's passengers onward from Beijing to Wuhan.

 

Three major airline alliances dominate the international aviation industry -- Star Alliance, SkyTeam and Oneworld. SkyTeam has 10 member airlines and Oneworld eight. China Southern Airlines, one of the three major Chinese carriers, signed a MoU with SkyTeam early last year. It is likely to join the global alliance early next year, the media reported.

 

Air China said its cooperation with Star Alliance would "be mutually beneficial."

 

 

"With economic globalization and open skies competition in the airline industry will become more and more difficult," said Li Jiaxiang, Air China's chairman, at the signing ceremony. "No airline can create a global network by itself. In order to survive and develop airlines have to cooperate with partners in various forms including multilateral alliance cooperation," he said.

 

Analysts said Star Alliance membership could help Air China in its international expansion.

 

"Just as other airlines can connect to Air China's network, they in turn can benefit from?extensive international networks of the other members," said Ma Xiaoli, an aviation analyst at CITIC Securities.

 

"Air China will also have to improve its management and upgrade its service infrastructure in order to meet the requirements of Star Alliance," Ma said. "This is a very important step for Air China to become a truly internationally competitive carrier."

 

(China Daily May 23, 2006)