March 5, 2021

Star Alliance Puts Air India on an Indefinite Standby

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

The move throws into disarray a crucial part of the Indian government’s turnaround plan for Air India, which has been struggling as customers have turned to more efficiently run private airlines.

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, and former and current pilots have complained in recent months that the company was not following internationally recognized safety norms.

The Center for Asia Pacific Aviation estimated that the company had lost $1.75 billion in the most recent business year, which ended March 31. Air India reported a loss of $1.25 billion for the previous business year.

The Star Alliance network, which allows passengers to accrue frequent flier miles from 27 partner airlines around the world, including United and Singapore Airlines, has about 80 conditions that new airline members need to meet, like computer integration and safety standards.

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

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

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

Air India said the decision had been 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.

A Star Alliance project manager recently told Air India in writing that all the minimum joining requirements had 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 a letter to Star Alliance and in statements to the news media that the airline was asking them to fly longer hours than recommended, putting safety at risk.

Air India may need more than $2 billion for a successful turnaround, the Center for Asia Pacific Aviation estimates.

Air India plans to separate its ground operations, restructure its finances and expand its international flights to win new customers. In a presentation to bank lenders in April, the company said that it hoped to increase revenue by $1.1 billion and cut costs by $910 million a year.

“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 on 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 Monday.

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