After a delay of nearly 18-months, the state-owned Air India is all set join Star Alliance, the global umbrella body of airline, within July. The delay is believed to have cost the national carrier dearly with expected revenue gain not accruing in its books in spite of paying the joining fee of euro 10 million to the airline grouping.
The airline is also unlikely to gain much from the first-mover advantage of joining an alliance as rival Kingfisher Airlines has started integration with OneWorld and Jet Airways negotiating with SkyTeam and Star Alliance. In December 2007. Star Alliance had invited Air India to join the 27-member airline club but a slew of factors ? delay in having a single code for erstwhile Indian Airlines and Air India and migration to an integrated reservation system among others ? caused the flag carrier to miss several deadlines.
Air India’s integration with Star Alliance member network is expected to increase its revenue by 10-15% annually. It would also help the carrier reduce cost as it would share airport infrastructure with Star Alliance members. Once Air India integrates its network with member airlines, it will be able to provide seamless travel to its customers. The passengers would be able to travel from one of the continent to another on single boarding pass.
An Air India official said that almost all the 78 mandatory requirements to join Star Alliance had been fulfilled. Some of the top Star Alliance members are Lufthansa, Singapore Airlines, Air Canada, Continental Airlines and Turkish Airlines.
“Contrary to public perception we are joining Star Alliance within five months of having a single code and a new IT system. Worldwide airlines have taken nine months to two years to join the global alliances,” an Air India spokesperson said.
Air India chairman Arvind Jadhav is expected to meet civil aviation minister Vayalar Ravi to finalise date and venue for announcing the airline’s entry into Star Alliance. “It’s good thing to be part of an alliance. Becoming member of a global airline grouping has become almost non-negotiable for a carrier now,” Centre for Asia Pacific Aviation (CAPA) India head Kapil Kaul said. He, however, added that Air India needs to sort out the structural problems.
Air India is currently facing one of the worst financial crisis and banking on the government’s cash assistance to stay afloat. The carrier also needs to strengthen its top deck to ensure better implementation of a recently-approved turnaround plan.
The civil aviation ministry has asked Air India to induct new functional directors ahead of further equity infusion into it by the government and approval of hiving off airline’s ground handling and MRO (maintenance, repair and overhaul) operations.