Ai Plans Peace Talks In Bid To Ride Piggyback On Sia

Singapore International Airlines (SIA) and Air India are squaring off in a boardroom battle with the former trying to figure out how to say no to the Indian carriers request for code-sharing without hurting its own chances of getting increased frequencies into India.

The airlines will resume talks later this month on a variety of issues including joint ventures in ground services, catering and other forms of cooperation that go beyond the sharing of codes, SIA announced over the weekend.

If the code-sharing goes through, it means that passengers in some parts of the world could conceivably buy an SIA ticket but may well find themselves boarding Air India flights and vice versa.

 

Airline industry sources say governmental talks on capacity expansion are likely to take place after the airlines conclude their discussions.

SIA is keen on more flights into India, citing rising demand. Air India on the other hand is reluctant to see this conceded, partly because it expects the spillover demand for SIA seats to come to it.

Air India officials argue that the average demand for seats into India is under 7,000 a week while the available capacity has already exceeded 13,000 seats. SIA believes, however, that the capacity into India cannot be treated on a bulk basis but only by individual sectors.

Having a capacity for Chennai and Trivandrum, for instance, cannot be equated with the demand for seats to Mumbai and Delhi.

Analysts concede that Air Indias attempts to leverage on SIAs demands for more flights against its own request for code-sharing may be a justifiable negotiating tactic. However, its opposition also serves to signal a certain weakness from the Indian carrier and a lack of confidence on its own competence to service the demand for air transport into its own country. The last meeting between the two airlines, held on May 20, ended without results after SIA apparently expressed reluctance to go through with the largescale code-sharing arrangement sought by Air India.

SIA officials however say they had a fruitful exchange of views.

SIA made some proposals at the meeting that were in response to Air Indias request for broad-based cooperation. Air India wanted time to consider these proposals, they said, denying the talks had been called off.

Airline industry sources say the root of the problem is Air Indias eagerness to ride piggyback on SIA by negotiating a code-sharing arrangement. SIA, in turn, feels a deep gulf exists in the standards offered by the two airlines.

Given the fact that Air Indias improving standards still do not approach SIAs in so many ways, particularly in-flight entertainment and service, SIA apparently fears that this may adversely affect its own image and reputation.

After the May 20 talks, the Air India team returned to India clearly embittered, judging from the negative publicity that has appeared in the Indian press.