The Star Alliance has gained another member in Asia in the form of South Korea's Asiana Airlines, which has given the grouping a boost in improving access to mainland China.

Asiana formally joined Star on 1 March and is the fifth member in the Asia-Pacific, the others being Air New Zealand (ANZ), All Nippon Airways, Singapore Airlines and Thai Airways International. How long ANZ will remain a member is unclear, however, since oneworld's Qantas Airways is seeking to acquire a 22.5% stake.

Although ANZ says it "should not be assumed" that it will leave Star if the proposed deal is approved by regulators, many observers expect this will be the ultimate result.

Whatever happens in Australasia, Star believes it now has another jump on competitor alliances oneworld and SkyTeam in the Asian region as Asiana is a major operator to the increasingly important Chinese market.

All the major multilateral alliances have been trying to convince one of the mainland Chinese carriers to join for some time but none is expected to make a move in the near future as the local industry is undergoing sweeping changes in the form of airline mergers. Star is closest to Air China, however, and many expect the Beijing-based carrier to join the grouping at some stage. But for now, the alliance says, Asiana will help it with its extensive China network.

Asiana currently operates 146 flights each week to 12 mainland China cities - more than much larger home rival Korean Air, which is a member of SkyTeam. Asiana is also close to several major Chinese carriers through codeshare ties.

Star Alliance chief executive Jaan Albrecht says: "Through the membership of Asiana Airlines, Star Alliance has been able to leapfrog the competition." He adds that the alliance now offers nearly 600 flights each week to mainland China through its members.

Lufthansa's catering arm LSG Sky Chefs has meanwhile agreed to purchase a majority stake in Asiana's catering unit for Won 65 billion ($53 million). Asiana has been looking to sell some of its assets to raise cash for some time. A conditional agreement has now been signed under which LSG will acquire an 80% stake in its catering operation at Seoul's Incheon International Airport.

Asiana will retain 20% and it says LSG has agreed to make an unspecified additional payment based on the financial performance of the company after five years.

The outsourcing of its catering is just one of the initiatives Asiana hopes will boost profitability this year. It credits a return to the black in 2002 to a restructuring of its network during the year that focused on cutting loss-making routes, such as those to Hawaii and India, and boosting operations to China and Japan. A new route to Hanoi in Vietnam will start this year.

The carrier posted a 2002 full-year net profit of Won 194.1 billion compared to last year's net loss of Won 385 billion. Revenue rose 16% to Won 2.6 trillion while operating profit was Won 177 billion compared to 2001's Won 44.4 billion.

Nicholas Ionides Singapore

Source: Airline Business