Airline sets sights to alliance By Lu Haoting (China Daily) Updated: 2006-05-23 09:17
Air China Ltd yesterday signed a memorandum of understanding (MOU) to join
Star Alliance, the world's largest airline alliance.
The nation's
flagship carrier is the second Chinese airline in less than two weeks to
announce plans to join up.
"With Air China having chosen to join Star
Alliance, we have 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 will help the carrier to share information with other member carriers,
for example, in ticketing systems. It usually takes 12 months for an airline to
finish all the technical procedures in order to become a formal
member.
The entry of Chinese airlines is expected to be a strong boost to
Star Alliance's expansion in China as it allows other member airlines to extend
their networks in China.
"In the olden days, airlines competed against
each other. Today the competition is still there, but it has been extended to a
competition between airline alliances," said Wolfgang Mayrhuber, CEO and
chairman of Deutsche Lufthansa AG. Lufthansa is a founding member of Star
Alliance.
"The 18 members of Star Alliance will enjoy the beauty of being
connected to Air China's growing network, which is very strong in China and in
Asia," Mayrhuber said.
For 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 will 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 from Beijing to
Wuhan.
Three major airline alliances dominate the international aviation
industry: Star Alliance, SkyTeam and oneworld. SkyTeam has 10 member airlines
while oneworld has eight. China Southern Airlines, one of the three major
Chinese carriers, signed an MOU with SkyTeam early last year. It is likely to
join the global alliance early next year, media reported earlier.
Air
China said its co-operation with Star Alliance would "be mutually
beneficial." "With economic globalization and open skies, competition in the
airline industry will become more and more severe. No one airline can create a
global network by itself. In order to survive and develop, airlines have to
co-operate with other partners in various forms including multilateral alliance
co-operation," Li Jiaxiang, Air China's chairman, said at the signing
ceremony.
Analysts said the Star Alliance membership could help Air China
in its international expansion.
"Just as other airlines can connect to
Air China's network, Air China can also benefit from other member airlines'
extensive international network," 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 the
alliance. That is a very important step for Air China to become a truly
internationally competitive carrier," Ma said. (For more biz stories, please visit Industry Updates)
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