|FE Editorial : Starcrash|
| The Financial Express|
Every time we think we have heard the worst we could about Air India’s dysfunctionality, the national flag-carrier manages to lower the bar yet again. Civil aviation minister Ajit Singh has delivered the latest jolts. One, he said in an interview, only three of Air India’s 300 routes make money. Two, the airline’s induction into the Star Alliance is definitely history now, with the pilots’ strike apparently delivering the final strike against the airline’s credibility. Simultaneously, Axel Hilgers, the South Asia director of Lufthansa, which was mentoring Air India for induction into the Star Alliance, has devastatingly declared that Dubai is now the real hub of India, not Delhi! Given the many questions that had already been raised against the existing turnaround plan for Air India, the latest developments should really push the government to reconsider its R30,000 bailout plan for India. Also, while Singh keeps repeating that FDI in Indian skies awaits a consensus among UPA allies, Hilgers makes the more pertinent point: Compared with the other Asian growth markets, it doesn’t seem like the aviation industry is currently considered a strategic asset for future development in India. Otherwise, how could the minister simultaneously suggest that the aforementioned FDI approval is necessary but uncertain?
As for Air India’s divorce from Star Alliance, this has long-term implications. When the alliance was first forged in 2007, Air India promised to meet 87 minimum joining requirements. Set to the highest standards of customer service, security and technology, some of these were expensive and complicated, like the process of integrating the ticketing codes for erstwhile Indian Airlines and Air India. But all of this was supposed to be worthwhile, for the Star Alliance would allow India’s flag-bearer to add depth to its route network, reallocating unprofitable routes, making the best of primary markets, achieving scale in marketing and maintenance costs, and increasing revenues by 5-15%. Before Star finally abandoned faith in Air India, the airline asked for and got repeated extensions. And proceeded to squander these away. Already, Star, SkyTeam and oneworld alliances (together numbering more than 50 world airlines) dominate a substantial part of global air traffic, and some experts are predicting that the true competition in a decade will be between these alliances rather than between the airlines. They will boast the three biggest check-in-desks! It’s unconscionable that Air India has frittered away this advantage.
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