Air India reportedly plans to open talks with SkyTeam and oneworld, after ongoing plans to enter Star Alliance ended, according to a Business Standard report. Civil Aviation Minister Ajit Singh said, "To be part of the alliance, every member has to agree and that has not happened, especially after the pilots' strike, when we lost a lot of credibility. They [Star Alliance] have practically said no and have sent us a letter last week. We have asked Air India to look for other options and alliances." This paves the way for Jet Airways, which has applied for government permission to join Star Alliance. Mr Singh said, "I think Jet being a private airline cannot be a cause to stop them. It is also a domestic airline and flies with our national flag. It is up to Star Alliance to accept them."
Air India ends talks with Star, paving way for Jet Airways; AI open to talks with other alliances
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Star Alliance considers new platform for low-cost airlines, targeting Brazil's Azul & India's IndiGo
The Star Alliance is looking at following SkyTeam in offering a partnership platform for low-cost and hybrid carriers. Star sees the new platform, which would fall short of full membership but provide a model for selected LCCs to work with members, improving coverage in key markets.
Star has started to court Brazilian LCC Azul and Indian LCC IndiGo to join the potential programme, which would facilitate connections with participating Star members. Star has been trying to find a solution for India since 2011, when efforts to bring in Air India as a planned new member were suspended, while earlier this year Brazil’s largest carrier, TAM, began the process of transitioning from Star to oneworld.
But Star’s plan for a hybrid and LCC platform is controversial. Some Star members are against the concept of bringing in LCCs, fearing it could water down the alliance’s offering. Star’s pursuit of Azul is particularly controversial as at the same time the alliance has begun working at bringing in full-service carrier Avianca Brazil.
India's evolving global alliance mosaic: Star/SIA-Tata, oneworld/Air India-Qatar; SkyTeam/Jet-Etihad
Breathtakingly rapid changes in India are exposing a whole new panorama of the country's future international airline status. Just over two years ago, Star rejected Air India as a member, and the following year oneworld placed the admission of member-elect, Kingfisher on hold due to the carrier’s financial challenges. India's airlines were basket cases and its regulatory constraints promised to keep it that way. Today, thanks to some important (and long overdue) liberalising moves by the government, the country is shaping up as a potentially well balanced centre for each of the major BGAs.
Etihad clearly will have the first mover advantage, with its equity investment in Jet now having received regulatory approval to proceed, along with a substantial increase in seats in the Indian market. Meanwhile though, the long term pickings are so rich that other groups can no longer ignore the pressure to make a move.
All that is needed now is for India to remove its "5/20 rule" on international operations and - astonishingly - the country could leap from international dysfunctionality to commercial coherence in one bound. The impact for the national economy would be enormous.
But - there are one or two more barriers to be cleared. In India there always are. Perhaps this time the government will get it right, but don't bet on it just yet. And, although the alliances may be interested, they will remain wary of Indian pitfalls.