Air India likely to join Star Alliance by today
Air India is likely to be inducted into one of the largest interline networks of the world by Tuesday, a senior airline official said.
“I can confirm that we are now a member of Star Alliance,” a spokesman at the national carrier confirmed late evening. Members of the alliance, the Air India’s top management and aviation minister Pusapati Ashok Gajapati Raju will make a formal announcement in Delhi on Thursday. Joining Star Alliance will give Air India passengers direct access to 21,900 daily flights to 1,328 destinations in 195 countries by meshing frequent flyer programmes, codeshares and interline agreements with member carriers such as Lufthansa, Qantas and Singapore Airlines.
Air India is expected to earn Rs 16,000 crore in revenue this year and a senior executive told ET that this will be boosted by 3% because of the partnerships with carriers through its Star Alliance membership. Star Alliance is the largest of three global alliances, the other two being Oneworld and Sky Team. As of May, the alliance had a 26% global market share, while Sky Team had 20%, and Oneworld had 16%.
“This (entry into Star Alliance) is partly a reward for Air India’s substantial improvement, but mostly a barometer of the global industry, as the three Gulf carriers have come to dominate the international long-haul Indian market,” Sydney-based consultant CAPA-Centre for Aviation had said in a recent report. But in the coming months, because of recent global mergers, Star Alliance’ market share will fall to 23% while OneWorld will increase to 20%. Air India had in 2008 been invited for a membership into the global alliance, a year after it merged with erstwhile domestic carrier Indian airlines.
The merger, however, was fraught with difficulties, not least because of the integration of the massive workforces in the two companies. Reeling under the pressures of the merger, a slowdown in travel, competition from fast-growing low-fare carriers and a frequent change in management (five managing directors in three years), Air India slumped into a still unbroken spell of constant losses.
The airline constantly missed fulfilling its membership requirements and its application was suspended in August 2011. But, the airline has improved its finances cutting its net loss to Rs 3,900 crore in FY14 compared to Rs 5,200 crore in the previous fiscal year. Over the last few months, Air India has been working to integrate its IT, reservation and payment systems in line with that of the other member carriers so it can seamlessly benefit from their operations. In May, the carrier’s chairman and managing director had said it completed 45 of 64 requirements for admission.
For Star Alliance members, especially Lufthansa, Air India’s entry means a partnership with a large-sized, although beleagured, carrier which it would hope will help it regain market lost to carriers such as Emirates and Etihad.
Lufthansa had once counted India as one of the key traffic generators from this region, ruling international traffic which travelled through its hub Frankfurt to the rest of the world. Emirates soon changed that, adding massive capacity to the country, based on manifold increases in bilateral allocations between Dubai and the country. It is, with 185 weekly flights, the biggest international carrier operating out of India, and bigger than all Indian foreign carriers but Jet Airways.