State-owned Air India, which has been denied entry into Star Alliance suspects that Lufthansa, which spearheads this network of the world?s top 27 airlines linking 855 airports in 155 countries, spoiled its case.
An internal Air India note to the civil aviation ministry, seen by FE, states that in December 2010, Lufthansa had attached certain unreasonable riders to its membership. Later, in March, the Star Alliance board approved the riders. The note states that at the instance of Lufthansa, Star Alliance asked Air India to support the case for Jet Airways becoming part of the alliance. This, when Jet had not even applied to the government for regulatory clearances to join the network.
?They (Lufthansa and Star Alliance) sought Air India?s unambiguous support for Jet Airways? entry into Star Alliance. By putting this as a pre-condition for Air India?s integration into the Alliance, they questioned India?s sovereignty since the entire negotiation process for our entry had been led by the government,? the note said. Air India has said that it has no objection to Jet joining Star, but this shouldn?t be made a pre-condition. A ministry official told FE that the ministry would not accede to the pressure tactic of either Lufthansa or Star Alliance.
Star Alliance chief executive Jaan Albrecht has said that Air India was denied membership because it did not fulfill all the joining criteria. In an official statement on August 1, Star Alliance said that the member airlines of the Star Alliance network and Air India had jointly concluded that the integration of Air India into the global airline alliance will be suspended. ?This is due to the fact that Air India has not met the minimum joining conditions that were contractually agreed upon in December 2007,? the statement said.
What seems contradictory is that Star Alliance?s executive Gerhard Girkinger had on July 30 told AI that it had fulfilled almost all basic joining parameters and the rest had to be met only after setting a joining date.
When contacted, Star Alliance?s media relations director said: ?We are bound by explicit confidentiality agreements and consistent with ethical and international business practices, we will not breach such an agreement. We can categorically state that Air India did not manage to comply with all requirements and conditions by the agreed deadline and as a result of evidence presented to the Star Alliance chief executive board, the decision to suspend the integration process had to be taken?.
?Since they have unfortunately decided to make use of an internal and confidential document, we must clarify that the decision to accept or not accept compliance to the full set of minimum joining conditions (as contractually agreed to in 2007), cannot be taken by a project manager at the Star Alliance Services GmbH. This decision can only be taken by the Star Alliance chief executive board based on an assessment of all completed joining conditions. Star Alliance has always maintained that the Indian market, just like the US and China, is large enough to support more than one member carrier,? he said.
A Lufthansa spokesperson said, “Lufthansa has fully supported Air India as a mentor in its efforts to join the Star Alliance, and as a mentor of Air India, we regret that the airline is not able to join the alliance as of now. According to Star Alliance rules, individual carrier votes are strictly confidential. Lufthansa honours these contractual obligations”. On the specific query if the Lufthansa CEO in December 2010 asked AI to support Jet Airways for Star Alliance membership and whether it can put such pre-condition, the company said that it has been its stated position that more than one airline can join the alliance from important markets like US, China or India.
With Air India already investing almost 20 million euros (Rs 126 crore) towards membership of the Alliance, the airline chairman and managing director Arvind Jadhav has urged the consortium management to resume talks for integration. A letter in this regard has already been sent to Star Alliance CEO Albrecht.
?The government can certainly react in an appropriate manner. Giving several points of call and traffic rights to Lufthansa was part of a package deal negotiated by the government for getting Star Alliance membership for Air India. Swiss International Airlines, which is part of Lufthansa, has a significant number of flights on the India-Switzerland route, without technically qualifying for it because its ownership is Swiss and not German. The government can review such concessions,? an official said.