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 cooperate with other partners in various forms including multilateral alliance cooperation," 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.

(China Daily May 23, 2006)