State-run carrier Air India will complete all the necessary requirements for its integration with Star Alliance before this weekend and ahead of schedule, as it looks to ensure that one of the most critical pillars of its turnaround plan goes through smoothly. After a wait of about seven years, Air India is to officially join the largest global airline alliance in July this year.
A top airline official told FE that training of its front-line staff is complete, while contracts such as commercial and legal agreements with Star Alliance partners is nearly done as well. Testing of the IT systems with partner airlines will be completed on Thursday.
“Our internal deadline had been May 15 and most of the work is now done. This is a very crucial part of our strategy and we need to get this right. We have been working on this for a long while on and have upgraded several processes to match the partners,” he said.
He added, “We are testing the file exchanges right now in the IT system. The contractual work for the frequent flyer programme, including the commercial and legal agreements, have been done with all the 26 airlines. The branding work is on as well, the templates are being made right now”.
The integration with the 26-airline group, which includes Air India’s long-time partner Lufthansa and Singapore Airlines, has been delayed several times in the past, with discussions happening intermittently since 2007.
Air India was again invited in December last year and is now expected to finally join after the CEOs from all partner airlines vote in its favour at a meeting in London on June 23 – a formal announcement will then be made in July.
Air India hopes to see strong benefits from the Star Alliance integration, such as a jump in passenger numbers and expansion of network through code share deals with partner airlines. Members of Air India’s frequent-flyer programme will also get access to over 1,000 lounges across the Star Alliance partners and will be able to collect miles across the alliance network. The move will boost revenues of the airline, which currently has debt of about R20,000 crore and expects to post a loss of R5,400 crore in FY14.
With a combined fleet strength of over 4,700 aircraft, Star Alliance is the largest of the three such partnerships, the others being Sky Team and One World. The alliances helps airlines across the world compete the growing clout of West Asia-based players, Emirates and Etihad, which are rapidly expanding across markets. Star Alliance is also looking at a second partner airline in India, which could be a low-cost carrier.
– Roudra Bhattacharya | Financial Express