Air India: Trying again to join the Star Alliance

Thursday 2, January 2014


Air India: Trying again to join the Star Alliance


Star Alliance, the world's largest airline alliance, will be inspecting how passenger-friendly or otherwise Air India is. The airline is now planning to ask the alliance to conduct a study and red flag the areas which need improvement.


Improving its image - a challenge for Air India. This is the second time Air India became close to join the alliance.


"We can get the passenger interface study done by any agency and then act on the weak points highlighted by it. But the Star Alliance is eventually going to do the same. So it makes more sense for us to ask them to do the study and tell us what needs to be done to meet their joining standards," said a senior official. Any alliance inducts an airline into its fold after making certain that passengers flying on it would get a similar experience as on its other member airlines.


Star Alliance, which has 28 airlines including Lufthansa Singapore Airlines in its fold, was initially reluctant to induct AI due to the airline's twin troubles — financial woes and poor image. But in past 12 months, some factors forced Star Alliance to change its mind.


Air India was first announced as a future member of the group in 2007. Back then, the state-owned carrier was in the midst of completing the merger with domestic carrier Indian Airlines and, combined with its famous inefficiencies as a government-owned entity rife with bureaucracy and political interference, simply proved unable to come close to meeting the many minimum requirements that Star wants future members to fulfill. In 2011, Star Alliance took the unusual step of shelving Air India's application which had missed many deadlines and did not look like it was going to meet the operational standards required.


European airlines in particular have recognized that they need to act against the large carriers based in the Middle East. They have come to the conclusion that if they don't take action now, India, as one of the most promising emerging markets, will be lost. Etihad has bought a minority stake in Jet Airways, India's second big international airline. Emirates also puts a lot of its capacity into the Indian market. Both carriers and Qatar Airways are pulling a huge amount of long-haul traffic (including on routes to India) and channeling it through their hubs. Star carriers felt they needed a local presence to counter the threat.


Doubts are clearly justified that Air India is the right choice, but so far there are few alternatives. The question is whether Star could have waited longer. After all, its member Singapore Airlines is one of the shareholders of a new Indian legacy carrier that is to be launched next year—Tata SIA Airlines. But that carrier will need years to build up a presence large enough to be able to provide significant local feed. Star executives obviously believed they did not have the time to wait and accepted Air India to join in 2014.



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