Air India May Be Forced Out Of Star Alliance Before It Joins

This Sunday, the 31st of July is the deadline for Air India to meet more than 75 requirements to join Star Alliance, the world’s largest airline alliance.  After 18 months of Air India delaying its entry into Star Alliance, since being invited to join the alliance in December 2007, the airline claims to now meet all requirements for entry … however the airline may no longer be welcome in the airline alliance.

 

As the date for Air India’s entry into the alliance draws closer, Jaan Albrecht, Star Alliance’s CEO, has voiced concern that a number of alliance’s 27 member airline CEOs have begin to object to Air India joining the alliance. With the increase in objections surrounding Air India’s entry into the alliance, Albrecht, expects a number of member airline CEO’s to veto Air India’s entry when the alliance’s Chief Executive Board meets this coming Sunday.  If a single airline member vetoes Air India’s entry they will not be admitted into Star Alliance.

 

While Star Alliance has been meeting with both Air India and India’s Civil Aviation Ministry over the past week, and Air India has paid its €10,000,000 (US$14.4mil) alliance entry fee, there are many questions that have no answers that may result in Air India being denied entry into the alliance.

 

The most recent question to come to light is a series of detailed letters submitted to Star Alliance by Air India employees, including pilots, documenting the airline’s systematic failure to ensure proper and consistent safety and maintenance procedures.   Air India’s Chairman and Managing Director, Arvind Jadhav, has defended the airline stating that the complaints are baseless, however documentation of many of the safety concerns has been difficult for the airline to refute.

 

Looking past employee safety and maintenance concerns, the long term issues that Star Alliance member airline CEOs must wrestle with before voting to allow, or deny, Air India entry into the alliance are the company’s consistent financial problems and its seemingly never ending liquidity issues. Air India has not been financially stable in a long time. On average the airline spends 158.33% more that it earns daily, with no end in sight.

 

As a National Flag Carrier it is expected that the Indian Government would be involved in Air India, however, the constant meddling of the Indian Government in Air India’s affairs lead to widely known corruption issues inside the airline. This intertwining between Air India and the government leave the airline struggling to survive, unable to make decisions on its own. When every decision requires a kickback … the entire company suffers.

 

Star Alliance member airlines need a reliable partner and Air India’s track record shows a lack of consistency, a poor on-time record, and a lack of corporate direction as to where the airline is headed … and all of this leads to what might be the biggest issue of all …

 

… Air India, once a well respected airline, now has terrible brand image, inconsistent passenger services and a well deserved reputation for horrific customer service. Do Star Alliance member airlines want to be associated with Air India? If Air India enters the Star Alliance, will member airlines be requires to help reshape the airline, and if so, is it a losing battle?

 

Add to all of this, the airline defaulting on its interest payments for the third month in a row, internal labour disputes due to a poorly executed merger and an ineffectively run global hub … and Star Alliance’s member CEOs have to ask themselves this … What does Air India truly offer Star Alliance?

 

Right now, Star Alliance wants access to India. India is a growing aviation market, none of India’s airlines are presently in an alliance and Air India offers the largest domestic network to tie into the Star Alliance network.  Air India stands to gain a revenue increase of 15% per year from entering Star Alliance. Ultimately though, the alliance needs to weigh if entry into the Indian market has benefits that outweigh the risk.

 

After 18 months of Air India delaying its entry into Star Alliance, the airline’s expected entry date has once again been pushed back a few weeks … if it is to have any entry at all.   For now, we have to watch and wait until the alliance’s Chief Executive Board votes on Sunday, but it’s not looking good for Air India.

 

Happy Flying!