March 3, 2021

Airline Alliance Puts Air India on Standby, Indefinitely

NEW DELHI — A key part of the Indian government’s turnaround plan for Air India, the country’s loss-making national carrier, has collapsed.

Star Alliance, a global network of airlines that caters to frequent international travelers, said Monday that Air India’s pending membership had been suspended.

“Air India has not met the minimum joining conditions that were contractually agreed in December 2007,” Star Alliance said in a statement Monday. The alliance had said earlier this year that Air India would need to be ready to join by the end of July at the latest.

Air India has been struggling as customers have turned to more efficiently run private airlines in India. The company has a reputation for late flights and poor customer service, and it is hemorrhaging money.

Many employees have not received their full paychecks in more than a month. The Center for Asia Pacific Aviation estimates that the company lost $1.75 billion in the most recent fiscal year, which ended March 31.

Joining the Star Alliance network, which allows passengers to accrue frequent flyer miles from 27 partner airlines around the world, would bring Air India an increase of 9 to 15 percent in revenues, an Air India executive said earlier this year. The network has about 80 different conditions that new airline members need to meet, from computer integration to safety standards.

The Indian Ministry for Civil Aviation; Jaan Albrecht, the chief executive of Star Alliance; and Arvind Jadhav, the Air India chairman and managing director, met on July 18 to review the company’s application, Star Alliance said. Then, Star Alliance’s board voted by e-mail on the airline’s pending membership.

Star Alliance could not single out individual terms which had not been met over the past three and a half years because of confidentiality agreements with Air India, Christian Klick, a vice president in the alliance’s headquarters in Germany said Monday. It has been three and a half years since Air India was invited to join the alliance, he said, and all conditions were explained to the airline then.

Air India said the suspension was a surprise. “They have just informed us this morning that the board has taken the decision to put our membership on hold,” Kamaljeet Rattan, an Air India spokesman, said by phone.

Star Alliance’s project manager had recently told Air India in writing that all the minimum joining requirements have been met, Mr. Rattan said. “We don’t know why they put us on hold,” he said.

Last month, Mr. Albrecht said that Air India had passed a safety review by Star Alliance members and expressed optimism that Air India would make a July 31 deadline to meet the remainder of the membership requirements.

Pilots for Air India have complained in statements and to the news media in recent months that the airline was asking them to fly longer hours than recommended.

Air India may need more than $2 billion for a successful turnaround, the aviation center estimates. Air India plans to hive off its ground operations and expand its international flights to win new customers.

“With the collective decision to put the integration efforts on hold today we aim to contribute to Air India’s flexibility to concentrate on its ongoing strategic reorientation,” Mr. Albrecht said in the statement Monday.

Star Alliance has said in the past that the Indian aviation market is so big that it expects to sign up more than one partner in the country. There are no talks pending with any other airline at this time, though, Star Alliance executives said.

Article source: http://www.nytimes.com/2011/08/02/business/global/airline-alliance-puts-air-india-on-standby-indefinitely.html?partner=rss&emc=rss

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