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India’s national carrier Air India has achieved a rather dubious first — the Star Alliance network of airlines, has suspended Air India’s membership application indefinitely — the first time it has done for any applicant airline.
In a diplomatically worded release, the network says
The member airlines of the Star Alliance network and Air India have jointly concluded that the integration of Air India into the global airline alliance will be suspended. This is due to the fact that Air India has not met the minimum joining conditions that were contractually agreed in December 2007.
Following a recent review of the status of Air India’s application at a meeting held between the Indian Ministry for Civil Aviation, Star Alliance CEO, Jaan Albrecht and the Air India CMD, Arvind Jadhav, the decision to suspend has received subsequent confirmation by the Star Alliance Chief Executive Board.
A spokesperson for Air India confirmed that the airline has received notice of the decision. He informed Bangalore Aviation that the carrier is in discussions with the alliance.
Since 2007, Air India has been grappling to meet an extensive list of requirements and the alliance has repeatedly revised its deadline for the carrier. Air India was given a final deadline of July 31 to join the group of airlines, the largest in the world, which has 27 members that carry more than 600 million passengers a year.
This is a major setback to the national carrier not just in reputation but also in terms of potential revenue. The alliance membership was expected to bring in about $150 million worth of desperately needed annual revenue and was a cornerstone of a turnaround plan of the airline.
An Air India source wishing to remain anonymous expressed surprise at the decision since the carrier has written confirmation from the alliance’s integration process chief that the airline has met the minimum requirements.
However, an industry insider familiar with the workings of alliances, indicated that even if Air India has met the list of requirements, each member airline of the Star alliance also looks at the applicant airline in terms of its reputation, brand equity and loyalty, financial stability, etc. The financial mess at Air India, repeated strikes, and lack of a coherent turn-around plan or visibility in to the viability of the airline has eroded what little confidence the industry had for the carrier. Politics may have also played a role. Under pressure to support Air India, the Indian civil aviation ministry has dramatically scaled back granting additional bi-lateral rights to foreign carriers, many of them, members of the alliance. Is the Air India vote, a payback?
While all the parties are putting a positive spin on the decision, calling it an “indefinitely suspension”, the statement by Star Alliance CEO, Jaan Albrecht, if read carefully, seems to indicate the Air India application is effectively dead
“Existing bilateral relationships with Star Alliance member airlines are not affected by this decision, which also leaves room to discuss a potential Alliance membership at a future stage, if deemed appropriate by both parties.”
A spokesperson for the mentor for Air India’s integration in to the Star alliance, Germany’s Lufthansa, said that the decision of the alliance will not affect its existing bi-lateral relations with Air India which covers about 300 code-share flights globally.
The decision by the alliance opens an opportunity for Mumbai based Jet Airways who, despite regular announcements to the contrary remains keen to join the alliance. The alliance sees the India market as a major opportunity and is keen to have a member from India join the alliance.
Jet has existing bi-laterals with a few Star alliance members like United Airlines and Brussels Airlines, and has created a European scissor hub at Brussels. Industry scuttlebutt has it, that some Star member airlines are keen to have Jet in the alliance and Air India out.
The elephant in any Jet-Star alliance room will be Air India’s boss — the Ministry of Civil Aviation, who is without doubt, most unhappy with the decision of the alliance. But then, the political clout of Jet Airway’s boss Mr. Naresh Goyal, is legendary.
What are your thoughts on these developments?
- Does Air India deserve the decision of the alliance?
- Should the alliance invite Jet Airways?
- Should the alliance give Air India another chance?
- Has Star alliance muddled its relations and strategy for India?
- What advice would you give to Air India or the Star alliance?
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