Air India's plan: If Star disposes, propose to OneWorld

Star Alliance members are scheduled to meet and vote by month-end

State-owned Air India is looking at exploring an alliance with airline grouping OneWorld if its application for membership is not processed by the Star Alliance by the end of this month.

“We cannot wait endlessly for induction into Star Alliance. The members are scheduled to meet and vote at the end of this month. If we do not receive a positive response, we will proceed with our talks with Qatar Airways for membership in OneWorld,” said a senior official in Air India. The carrier’s application for membership is pending with Star Alliance since May 2008.

Air India Chairman and Managing Director Rohit Nandan, along with senior airline executives, is in Germany to meet Christoph Franz, chief executive of Lufthansa. The German carrier is Air India’s mentor to join Star Alliance.

If negotiations do not progress favourably, the national carrier is open to advancing talks with OneWorld. Alternatively, Air India is also exploring inking extensive code-share agreements with airlines globally to expand its reach.

 

According to data available with Centre for Asia Pacific Aviation (CAPA), while Star Alliance has a share of 12.9% in global air traffic industry, ‘oneworld’ and SkyTeam have market shares of 10.1% and 6.6% respectively.

 

Star Alliance has been looking at inducting a member airline in India to increase its share in the 37 million passenger strong international travel market in the country. The board of the 28-member Star Alliance met in Philippines in June earlier this year to discuss the growing presence of West Asian airlines in Indian skies and to consider the potential membership for Air India. The board meeting came close on the heels of Abu-Dhabi based Etihad Airways announcing its decision to pick up 24% stake in Jet Airways and the Indian government trebling air traffic entitlements to 50,000 seats per week to UAE (Abu Dhabi) spread over a three-year period.

 

Star Alliance had put on hold Air India’s application to join the airline grouping in 2011. The carrier could not join the alliance as it was grappling with several challenges such as repeated strikes by pilots, shrinking market share, worsening on-time performance and merging of codes of erstwhile Indian Airlines with Air India. Before Air India’s application was put on hold, it had paid Euro 10 million (about Rs 71.5 crore today) since May 2008 to Star Alliance as part of the joining fee.

 

While Lufthansa and other board members were keen to admit Jet Airways into Star Alliance alongside Air India, the national carrier had opposed the move as it would lose the first mover advantage. Even as Air India was kept out of the alliance Jet Airways and Lufthansa were working out a wider partnership including code share pacts covering Europe and US. Jet Airways received an in principle nod from the civil aviation ministry for the code share agreement but the plan fizzled out after airline began negotiating a stake sale agreement with Etihad Airways last August.

 

Star Alliance is the largest of the three airline alliances in the world. The other two are SkyTeam and Oneworld. Star Alliance includes Lufthansa, Air Canada, Singapore Airlines and Thai Airways International. A membership in the group ensures shared benefits to members and seamless travel to passengers, usage of frequent flier points redeemable with any member airline and global connectivity. Facilities for Star Alliance members are located close to each other at airports. The alliance network offers 21,900 daily flights to 1,328 airports in 195 nations. The alliance carried 727.42 million passengers on its network last year.