AIR INDIA’S bid to join the Star Alliance has been grounded after the global airline network said it had not met the minimum standards for membership.
The decision to suspend the application, which was approved by the Alliance’s board, is a fresh blow to the ailing state carrier, already battling mounting debts and loss of passenger share to private airlines.
One analyst suggested the airline’s bid to join the likes of Lufthansa, United, Air Canada and Singapore Airlines was now doomed to fail.
“From a broader people, business and financial perspective, it (Air India) doesn’t fit in,” said Kapil Kaul, from global consultancy the Centre for Asia-Pacific Aviation (CAPA) in New Delhi.
“It (the application) is delayed beyond the point of return,” he told reporters.
Star Alliance said on its website that the group’s 27 members had “jointly concluded that the integration of Air India into the global alliance will be suspended”.
“This is due to the fact that Air India has not met the minimum joining conditions that were contractually agreed in December 2007,” it added in a statement from Frankfurt.
Star Alliance chief executive Jaan Albrecht and Air India boss Arvind Jadhav recently reviewed the company’s application with India’s civil aviation ministry.
Albrecht added: “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 orientation.
“In this process our member carriers will continue to provide assistance to Air India wherever required.”
Air India, which had been given a July 31 deadline to meet joining criteria in a range of areas from branding to ticketing, is currently waiting for approval of a five-year turnaround plan.
That includes a government cash injection and a new business plan that would increase its fleet size, cut routes and set up network hubs.
The Indian government pumped about $178m (£109.34m) into the airline in the financial year 2009-10 and expects to put in another $271.15m (£166.58m) this year on condition the company cuts costs.
The restructuring plan is currently under review.
Private airlines like Jet Airways, Kingfisher and low-cost rivals like Indigo and SpiceJet have replaced Air India as a preferred airline in recent years.
Air India spokesman in New Delhi Kamaljeet Rattan confirmed that they had been informed of the suspension but said they were not given any indication of the reason.
“We have in our possession a letter from the project manager at Star Alliance confirming that we have met all the minimum joining requirements, so we don’t know why this decision has been taken,” he said.
The airline had met the stipulated criteria, barring “a few components” that would be implemented before it joined the alliance, he added.
Star Alliance members operate more than 21,200 flights a day to 1,185 airports in 185 countries and membership for Air India would have given it a much-needed boost and raised its profile across the world.
CAPA’s Kaul said the decision was a blow to both parties as it came after two years’ discussions and at a time when India is seen as a growing target market for international airlines.
“It has a significant downside to it because by the time they decide to induct another partner, possibly Jet Airways, I’m not very sure whether they will get the regulatory clearance from the government,” he said.
“For Air India, there can’t be any downside, as they can’t go any further down.”
