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Opinion: Air India’s Star alliance membership is a precursor to Tata-SIA entry

During his visit to India, Mark Schwab the CEO of the Star Alliance, the world’s largest airline grouping, announced that national carrier Air India could join the alliance within the next six months.

In a press interaction Schwab said “without giving a specific date, one can say that we will complete all the ground work and formalities of Air India’s entry into the Star Alliance club by this summer” “After that, they will be ready to join straight away.”

Air India first signed up to apply for Star membership back in late 2007. Thanks to various bureaucratic fumbles classic of the airline, the alliance in July 2011, “suspended” the airline’s application.

Schwab said, “We are satisfied with the changes made by Air India in the last year” “Star Alliance has also changed some membership requirements, and all our 28 members have voted unanimously in favour of Air India.”

[bsu_pullquote]“without giving a specific date, one can say that we will complete all the ground work and formalities of Air India’s entry into the Star Alliance club by this summer”
-Mark Schwab, CEO, Star Alliance
[/bsu_pullquote]What has changed in the last two years, when the alliance, bestowed on Air India the ignominy of being the first airline whose membership process in to the alliance had been “suspended”.

Star wants access to the lucrative and fast growing Indian market. Despite leading the other two alliances, oneworld and SkyTeam by over 50%, it is estimated that all Star alliance carriers have only a 13% share of India’s international traffic. In comparison, Dubai-based Emirates, alone, is estimated to carry 14% of India’s international traffic with Qatar at 7%. Etihad which recently bought a 24% stake in India’s Jet Airways along with a sweetheart bi-lateral air services agreement with India which will see the carrier get similar traffic volumes of Emirates in the next three years. Air India and Jet Airways are estimated to have about 30% share.

Yet, while Star wants India, they really do not want Air India. The national carrier is beset with sloth and indifference bought on by years government ownership which guarantees employment for life with no concept of accountability, is bailed out by the Indian tax-payer at a direct cost of over Rs. 1 crore (Rs. 10 million) per employee. Shwab indicated that Air India must still improve over 75 “core values” related to passenger services to bring them up to the alliance’s standards. Keep in mind these standards are the same that tolerate the virtually non-existent customer service of north American carriers like United Airlines, so what does that say about Air India’s customer service?

In 2011, Star even went so far as to put an ultimatum before the government that it would permit Air India’s entry, only if the government also assured its permission for Jet Airways to enter the alliance. The government did not buckle, the issue died down, and Jet sold itself, well at least 24%, to Etihad. With Star vehemently opposed to gulf carriers, and Etihad’s cooperation with SkyTeam founder member Air France-KLM, the topic of Jet becoming a Star alliance member died a swift death.

That still does not justify the entry of Air India.

Enter India’s most respected conglomerate, the Tatas, who coincidentally owned Air India till 1954, and successfully managed it till the 1970s. Reviving its old partnership with Singapore Airlines (SIA), an airline the erstwhile Indian Airlines helped found and train, the 2014 should see the entry of a full service Tata-SIA airline in India.

The lobbying clout of the Tatas is well demonstrated by the commencement of the civil aviation ministry to eliminate the 5-20 rule which requires an Indian airline to operate for five years and have a fleet of 20 aircraft prior to being allowed to fly overseas. A ruling that is expected to directly help the two new incoming airlines, AirAsia India and Tata-SIA both of which in whom the Tatas have a stake.

In 2011, it was rumoured that the South East Asian members of Star voted against Air India. The vote of the 28 members is secret. This time around at least one ASEAN carrier, a very powerful member of the alliance, will stand to benefit.

Yes, I am speculating, but I strongly opine, that the entry of Air India is a calculated move by the Tata-SIA combine to prevent a repeat of 2011, which was a PR disaster for the alliance.

Share your thoughts via a comment.

About Devesh Agarwal

A electronics and automotive product management, marketing and branding expert, he was awarded a silver medal at the Lockheed Martin innovation competition 2010. He is ranked 6th on Mashable's list of aviation pros on Twitter and in addition to Bangalore Aviation, he has contributed to leading publications like Aviation Week, Conde Nast Traveller India, The Economic Times, and The Mint (a Wall Street Journal content partner). He remains a frequent flier and shares the good, the bad, and the ugly about the Indian aviation industry without fear or favour.

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