The Star Alliance will expand to nine full members before the end of 1999, following All Nippon Airlines' (ANA) decision to join.

ANA president, Kichisaburo Nomura, says his company will take up full membership at the start of October 1999, following the example of Ansett and Air New Zealand, which also plan to become full members in 1999. They join the six founding members: Air Canada, Lufthansa, Varig, Thai, United Airlines and SAS.

At a Star board of directors' meeting in Rio de Janeiro in October, Star Alliance presidents said they believed their group was more genuinely worldwide than its rivals, notably the British Airways-American Airlines oneworld alliance. Customer service and flexibility would be their watch words, they said.

"It [oneworld] will be a strong competitor, but we like competition because we provide better service to our customers if we are challenged," says Lufthansa president Jurgen Weber.

United Airlines' executive president, Gerald Greenwald, adds: "The Star Alliance is an alliance of independent, separate companies. We do not have a full business plan that covers all the companies. We work together to improve passenger service. If there is a common theme, it is flexibility."

The airlines claim that the alliance has already resulted in significant cost savings and revenue improvements. SAS hopes to increase profitability by around 6.5% of turnover in two years - around $200 million - while Lufthansa saw a similar increase in revenue ($230 million) allied to "significant" cost savings. United says it has seen an increase of $200 million in net revenue through the alliance, while Thai estimates increases of between $60 and $70 million.

Varig president, Fernando Pinto, says his airline has reduced operation costs by $200 million in recent months. But, he admits,"-it's hard to tell exactly how much of this is due to Star Alliance and how much is due to our own internal efforts."

Source: Airline Business