In a move that is expected to speed up Air India's (AI) drive towards profitability, the state-run carrier has formally joined the world's largest airline partnership, Star Alliance. A culmination of seven years of talks, the decision to include Air India into the exclusive Star Alliance network was taken after 26 Star member carriers voted in favour of Air India at a meeting of its Chief Executive Board held in London late on Monday.
Air India now expects 4-5% revenue growth on the back of passenger additions from partner airlines especially in the premium 'business' and 'first class' categories. The benefits will start pouring in from July 11th when both AI and Star member passengers will be able to book tickets through an integrated systems and avail frequent flyer miles across the common network. With a fleet of 4,338 aircraft across its members, Star Alliance offers more than 18,000 daily flights to 1,293 airports in 193 countries.
“Aviation as a sector is nowhere near its potential, so we are working on measures to improve the industry's financials and guarantee better services for passengers,” union civil aviation minister Ashok Gajapathi Raju Pusapathi said.
Asked if a decision on AI's privatisation has been taken, the minister added, “There is no decision yet, but we have discussed the condition of the airline with the Prime Minister”.
Rohit Nandan, Air India's CMD said that the integration of frequent flyer programmes and booking systems with Star member carriers has already been done, and the next step is to take it further with code-share and interline agreements. “As part of our marketing exercise, we will paint an Airbus A320 aircraft in the Star Alliance logo and livery. By October-November, we will also paint a Boeing B787 Dreamliner in the same livery,” he said.
Established by five carriers, US-based United, Lufthansa, Air Canada, Scandinavian and Thai in 1997, Star Alliance today also includes other major carriers like Singapore, Swiss, Austrian, All Nippon Airways, Air China and Turkish Airlines. Currently 13 Star members operate to 10 destinations in India, accounting for a 13% market share of international traffic, which with AI will increase to 30%.
Air India, which recorded a loss of over Rs 5,000 crore in FY14 and has liabilities of about Rs 40,000 crore, expects major cost savings from the Star Alliance integration like common fuel purchases and sharing ground handling staff at certain airports. Brand association with a premium