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Air India and the Star Alliance (Part II)

Air India and the Star Alliance (Part II)

Old Jul 29, 2011, 4:45 am
  #196  
 
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Originally Posted by Yaatri
I agree with you 100%. That's the key point here. They should vote on whether AI met their requirements within the time frame agreed to in May. Everything else is looking for an excuse to put pressure on AI and GoI to extract some concessions.
I agree with you, but I doubt very much whether the reasons behind the vote will ever be made public ( in fact I don't think it will even be disclosed which airline(s) vote no, and it only needs to be one) . Bearing in mind that AI failed to get to the required standards in the 40 months from Dec 2007 to May 2011 I am not convinced that they would actually get themselves up to speed and meet the standards in the brief time since then.


What is clear, is that if the reports that 10 *A airlines (over 1/3 of the total current members) are not willing to vote in AI's favour are true then it seems to be much more than just a push from LH as some have suggested, as the LH controlled airlines (LH/LX/OS/BD/SN) would only muster 5 votes between them. In the 14 years since *A was formed this is an unprecedented situation, I find it hard to believe that A* are singling out AI without valid reason at the risk of losing a significant place in a vital market .

Last edited by kiwiandrew; Jul 29, 2011 at 5:03 am
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Old Jul 29, 2011, 5:20 am
  #197  
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Originally Posted by kiwiandrew
I doubt very much whether the individual members will disclose the reasons for their vote. While I think *A to a certain extent have painted themselves into a corner on this issue I still think it would be very unfortunate if they, and 9W, find themselves punished because of AI's inability/unwillingness to meet the standards that they agreed to nearly 4 years ago.

Part of the problem, from the enthusiasts point of view, is that we will never know the full story, so much goes on behind closed doors. What is clear is that no other candidate member of any alliance has found themselves in this situation after having initially been accepted as a future member. If the reports are true that up to 10 of *A's members are unwilling to vote for AI's accession that suggests a serious level of concern about their fitness for membership rather than simply a vendetta or political gesture on the part of one or two airlines.
It's true, we will never know what's going on behind the scenes. While AI's failings are out there for all to see, I can't help wonder if some opposition to AI is not due to worries of loosing a share of India market, if AI, enters the alliance.
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Old Jul 29, 2011, 5:38 am
  #198  
 
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Originally Posted by Yaatri
It's true, we will never know what's going on behind the scenes. While AI's failings are out there for all to see, I can't help wonder if some opposition to AI is not due to worries of loosing a share of India market, if AI, enters the alliance.
Perhaps, but I think it has to be asked why , since AI's candidature was announced in Dec 2007, have Aegean Airlines, Brussels Airlines Egyptair, Continental Airlines, TAM and Turkish Airlines all managed to meet the agreed standards ( Egyptair even managed to go from candidate to full member in an amazing 9 months!) while Ethiopian Airlines, Avianca-Taca and Copa all seem certain to make the transition to full members within the next 12 months.

It does not seem credible to me that AI is being somehow 'picked on', indeed *A have had numerous opportunities to tell AI "sorry, but you are not trying hard enough" but instead they have shown extraordinary patience as AI have missed one deadline after another. To me the wonder is not that *A seem to have finally run out of patience, but rather, that it has taken them so long to reach the point of saying "you are either in or you aren't".

If you believe that *A members are concerned about losing a portion of the Indian market by letting in an Indian carrier why are they so keen to get hold of 9W?
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Old Jul 29, 2011, 6:02 am
  #199  
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Originally Posted by kiwiandrew
Perhaps, but I think it has to be asked why , since AI's candidature was announced in Dec 2007, have Aegean Airlines, Brussels Airlines Egyptair, Continental Airlines, TAM and Turkish Airlines all managed to meet the agreed standards ( Egyptair even managed to go from candidate to full member in an amazing 9 months!) while Ethiopian Airlines, Avianca-Taca and Copa all seem certain to make the transition to full members within the next 12 months.

It does not seem credible to me that AI is being somehow 'picked on', indeed *A have had numerous opportunities to tell AI "sorry, but you are not trying hard enough" but instead they have shown extraordinary patience as AI have missed one deadline after another. To me the wonder is not that *A seem to have finally run out of patience, but rather, that it has taken them so long to reach the point of saying "you are either in or you aren't".

If you believe that *A members are concerned about losing a portion of the Indian market by letting in an Indian carrier why are they so keen to get hold of 9W?
You are right to point out how other airlines were able to meet the requirements to join the alliance. I am not saying AI is being picked on. None of the airlines you mentioned represent a market the size of Indian market and the growth potential it has. Clearly AI has failed. It's OK to
vote against AI on merits. The one airline that stands to gain from supporting AI's bid is LH. Other members if star airlines don't. I doubt UA cares much whether Ai joins the alliance or not. UA even gave up flying to India. It's LH that's hoping to dominate the Indian market. None of the other members gains much by supporting India's bid, if anything they face losing that market to LH and maybe to AI. So, it's not picking on AI that's the reason, but losing out to LH and AI.
It's true that *A had many opportunities to wash its hands off AI. But It hasn't. Because LH is pushing for AI's entry. US, probably has no position on AI. CO would oppose it, so would TG, SQ, SAS, AC, Austrian and SWISS. Turkish Airline has been doing brisk business to India since joining Star Alliance. So I wouldn't be surprised if Turkish would oppose AI's entry. Air China might be another opponent. SN would probably prefer 9W over AI. That makes 10 airlines. Of course, I might be completely wrong, and we may never find out who would end voting against AI.
This is not sheer speculation on my part. The reasoning is quite plausible.
We do not know hoe many, if any, * member would oppose 9W. Why wouldn't they oppose 9W It's elementary my dear kiwiandrew. 9W does not come with the clout that AI has in GoI. LH will not get favourable treatment from GoI if 9W were to join *. Any unfair advnatge that LH hopes to get from GoI vanishes in that case.
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Old Jul 29, 2011, 6:06 am
  #200  
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Its hillarious how the GoI is trying to put the spin on the story in the direction of: 'they don't want us anymore because they feel threatened to induct such a powerful partner'

Evidently ST (or AF/KL) has put a serious deal on the table and a few bags of interesting stuff under the table. Lets hope they know what they are doing. ST is far less integrative than OW or *A so they might get away with it and finally do a decent expansion into India. Current service into the subcontinent is rather limited.
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Old Jul 29, 2011, 6:11 am
  #201  
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Originally Posted by oliver2002
Its hillarious how the GoI is trying to put the spin on the story in the direction of: 'they don't want us anymore because they feel threatened to induct such a powerful partner'

Evidently ST (or AF/KL) has put a serious deal on the table and a few bags of interesting stuff under the table. Lets hope they know what they are doing. ST is far less integrative than OW or *A so they might get away with it and finally do a decent expansion into India. Current service into the subcontinent is rather limited.
That spin is, of course silly. What's AF putting up? If The French Govt steps in, it can put some twists in the deal. India buys armament (aircraft, submarines, and possibly other naval vessels/technology in future) and nuclear reactors from France which gives the French Govt some power over GoI. Germany doesn't wield that power over India.
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Old Jul 29, 2011, 6:37 am
  #202  
 
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Originally Posted by oliver2002
Current service into the subcontinent is rather limited.
Which can completely change over night if they make the Govt. happy by letting AI join Sky Team in case *A votes against AI and then we will see AF A380s in major metros across India.
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Old Jul 29, 2011, 6:59 am
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Originally Posted by Yaatri
Because LH is pushing for AI's entry. US, probably has no position on AI. CO would oppose it, so would TG, SQ, SAS, AC, Austrian and SWISS. Turkish Airline has been doing brisk business to India since joining Star Alliance. So I wouldn't be surprised if Turkish would oppose AI's entry. Air China might be another opponent. SN would probably prefer 9W over AI. That makes 10 airlines......This is not sheer speculation on my part. The reasoning is quite plausible. .
I would be very surprised to have Austrian, Swiss and SN vote against AI if their owner LH is in favour, I'm sorry, but I don't find your reasoning plausible where those carriers are concerned. In any case, you seem to be making the assumption airlines that airlines voting against AI have to be involved in some sort of conspiracy. Couldn't their reported opposition be simply because AI has repeatedly failed to live up to their side of the accession agreement? There is plenty of evidence for the latter and no real evidence that I am aware of for the former.


Your point that AI has tremendous clout with the government of India is, if anything, a point in favour of *A members voting for rather than against AI even if they have their doubts. Indeed I would argue that is exactly why *A has not previously shown AI the red flag. I am sure that any other candidate airline making such a poor showing of meeting the agreed standards would not have been given more than 3 years to shape up, they would have been told to get lost long ago.
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Old Jul 29, 2011, 7:04 am
  #204  
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Originally Posted by Yaatri
Germany doesn't wield that power over India.
You would be surprised... The Germans are very subtle... LH has all the slots and landing rights it needs into India right now... the last time that was a problem LH pushed the right buttons and got it corrected asap. the current bilateral limits the capacity per flight to a 747 which is a vague enough term. AI and other carriers operate a far higher density 744 than LH. The capacity they gaining by giving up HYD should suffice for a few additional flights into a suitable city. The A380 capacity is already planned for the next year and only becomes relevant when the next batch of birds is due for delivery. By then they have additional 744s they could deploy in a 2 class config to India.

DL/AF/KL has a lot to catch up to. This may be their break. Go for it ^ With the restrictive lounge policy for elites in ST they have nothing to fear
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Old Jul 29, 2011, 7:26 am
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Originally Posted by oliver2002
You would be surprised... The Germans are very subtle... LH has all the slots and landing rights it needs into India right now... the last time that was a problem LH pushed the right buttons and got it corrected asap. the current bilateral limits the capacity per flight to a 747 which is a vague enough term. AI and other carriers operate a far higher density 744 than LH. The capacity they gaining by giving up HYD should suffice for a few additional flights into a suitable city. The A380 capacity is already planned for the next year and only becomes relevant when the next batch of birds is due for delivery. By then they have additional 744s they could deploy in a 2 class config to India.

DL/AF/KL has a lot to catch up to. This may be their break. Go for it ^ With the restrictive lounge policy for elites in ST they have nothing to fear
If LH has all the slots/rights etc. that they need and if they are indeed capable of getting anything they want then why did they keep persisting with AI for the past 4 years. Why did they choose AI in the first place over 9W? LH might have gotten things sorted in their favor in the past when there was a different minister in charge of civil aviation in India but things are slightly different now.

The problem with getting permission to operate the A380 I think is with the aircraft itself and not the seating capacity. EK operates 7773ERs to India which have a capacity of 440 and its A380s are configured with 480 seats. If GoI said EK can operate A380 into India with a seating capacity of 440 they would probably consider it.

Looks like all LH A380s will be configured with 526 seats.

In fact some of SQ A380s have a capacity of 409. Much less than AI 747s which have a capacity of about 420. Yet SQ is not allowed to fly its A380s to India
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Old Jul 29, 2011, 7:39 am
  #206  
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AI sold their rights on the bilaterals to Switzerland and Austria for cash, just to give an example. So in order to be on the nice side of AI you had to offer some nice things. Same goes for the concessions LH made to allow AI use of FRA as a hub to north america.

Times are changing rapidly and I'm sure LH is confident enough to cut some cords, especially since alliances with AI are not helping to stop the gulf carriers steal market share to north america and europe.

It doesn't make sense for SQ or EK to use their flagship A380s into India. For such short haul hub connections they rather use high lift high density configs like the 772.
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Old Jul 29, 2011, 8:00 am
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Originally Posted by oliver2002
AI sold their rights on the bilaterals to Switzerland and Austria for cash, just to give an example. So in order to be on the nice side of AI you had to offer some nice things. Same goes for the concessions LH made to allow AI use of FRA as a hub to north america.

Times are changing rapidly and I'm sure LH is confident enough to cut some cords, especially since alliances with AI are not helping to stop the gulf carriers steal market share to north america and europe.

It doesn't make sense for SQ or EK to use their flagship A380s into India. For such short haul hub connections they rather use high lift high density configs like the 772.
Getting more bi-lateral rights in India is going to be tough now. The Govt is in the midst of scams and certain sections of the media have reported that the previous minister of civil aviation sold/benefited by giving away bi-laterals to foreign carriers while the Indian carriers couldn't utilize their quota partly due to the ridiculous rules like airlines should complete 5yrs and have 20 aircraft to be eligible for Intl Ops. The current minister has also said the Govt. is rethinking about the bi-laterals. So getting additional capacity for the gulf/European carriers is going to be difficult.

EK has been pleading with the GoI for a long time now to get the permit to fly the A380 to India. In fact EK was the first airline to show interest in operating the A380 to India. India is probably EKs biggest market and they would love to operate their flagship aircraft to Indian cities if given a chance.
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Old Jul 29, 2011, 8:04 am
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Air India's value to Star Alliance is NOT for the ULH nonstop India-North America routes that are pretty much the only longhaul that Air India operates today.

The real value is the spoke access to the Tier 3 cities in India which are increasingly generating more and more demand for longhaul. He who has the codeshare on Air India metal to Kanpur or Vizag or Guwahati will gain by capturing the longhaul traffic share. Right now, its up for grabs at the gateway. Getting Air India (or any other Indian carrier) into Star means that traffic flow is now captive.

The Star carriers know that Air India is not a threat to their bread-and-butter markets to/from India. They need Air India to feed those services. Conversely, Air India knows they cannot serve every market with marginal demand from India as a spoke (while the Star carriers can as a hub). Hence, Star has a value to Air India.

It's all about the feed. Air India isn't a global player and will never be one. There is no threat, other than to Star Alliance's image by association with the dysfunctional Air India brand.
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Old Jul 29, 2011, 8:43 am
  #209  
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AFAIK LH has already been tapping the tier 3 markets with fares that incorporate AI/9W as a feeder... for example:

Code:
29JUL11**29JUL11/LH NAGWAS/NSP;AT/TPM ...../MPM 10418                           
LN FARE BASIS    OW   INR  RT   B PEN  DATES/DAYS   AP MIN MAX R                
21+VRCOWAAW     36915           V  +     -     -   +  + 3+  -  R                
22 QRFAAW                 72425 Q  +     -     -   +  + -  12M R                
23+WRCOWAAW     32715           W  +     -     -   +  + 3+  -  R                
24+VRCAAW                 63425 V  +     -     -   +  + 3+ 12M R                
25+WRCAAW                 56425 W  +     -     -   +  + 3+ 12M R                
26+SRCAAW                 48425 S  +     -     -   +  + 3+ 12M R                
27+TRCAAW                 43425 T  +     -     -   +  + 3+ 12M R                
>                                                 PAGE  3/ 3                    
>fqr 27
FQR 27                                                                          
29JUL11**29JUL11/LH NAGWAS/NSP;AT/TPM ...../MPM 10418                           
***   FOR STAR ALLIANCE RTW* SEE FQD XYZXYZ EG:FRAFRA   ***                     
LN FARE BASIS    OW   INR  RT   B PEN  DATES/DAYS   AP MIN MAX R                
27+TRCAAW                 43425 T  +     -     -   +  + 3+ 12M R                
>                                                 PAGE  1/ 2                    

ADDON  LH0409  SPECIFIED  LH0409  ADDON          EFF21JUL11                     
  1 * NAG-LH/9W/AI-PNQ/BLR/CCU/HYD/MAA/BOM/DEL-LH-MUC/FRA-                      
      LH-VIE/DEL/BOM/MAD/BCN/LIS/ROM/MIL/STO/OSL/CPH/BFS/                       
      BRS/GLA/EDI/MAN/BHX/LON/SNN/DUB/BER/HAM/DUS/MUC/FRA/                      
      PAR/GVA/ZRH/BRU/AMS-LH-YTO/YMQ/NYC/BOS-AC/CO/UA/LH-                       
      WAS/CHI/CLE-AC/CO/UA/LH-WAS                                               
  2 * NAG-LH/9W/AI-PNQ/BLR/CCU/HYD/MAA/BOM/DEL-LH-MUC/FRA-                      
      LH-VIE/DEL/BOM/MAD/BCN/LIS/ROM/MIL/STO/OSL/CPH/BFS/                       
      BRS/GLA/EDI/MAN/BHX/LON/SNN/DUB/BER/HAM/DUS/MUC/FRA/                      
      PAR/GVA/ZRH/BRU/AMS-LH-PHL/NYC/YOW/YMQ/YTO/YUL/YHZ/                       
      BOS/DTT-AC/CO/UA/LH-WAS                                                   
  3 * NAG-LH/9W/AI-PNQ/BLR/CCU/HYD/MAA/BOM/DEL-LH-MUC/FRA-                      
      LH-VIE/DEL/BOM/MAD/BCN/LIS/ROM/MIL/STO/OSL/CPH/BFS/                       
      BRS/GLA/EDI/MAN/BHX/LON/SNN/DUB/BER/HAM/DUS/MUC/FRA/                      
      PAR/GVA/ZRH/BRU/AMS-LH-WAS                                                
>
What would AI contribute in case they are more in bed with LH? Sales force? Not likely. What else... I'm really trying to find synergies here...
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Old Jul 29, 2011, 9:47 am
  #210  
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Originally Posted by oliver2002
You would be surprised... The Germans are very subtle... LH has all the slots and landing rights it needs into India right now... the last time that was a problem LH pushed the right buttons and got it corrected asap. the current bilateral limits the capacity per flight to a 747 which is a vague enough term. AI and other carriers operate a far higher density 744 than LH. The capacity they gaining by giving up HYD should suffice for a few additional flights into a suitable city. The A380 capacity is already planned for the next year and only becomes relevant when the next batch of birds is due for delivery. By then they have additional 744s they could deploy in a 2 class config to India.

DL/AF/KL has a lot to catch up to. This may be their break. Go for it ^ With the restrictive lounge policy for elites in ST they have nothing to fear
None of this has anything to do with what I said, in response to your words.
Now what was that sweet deal you were talking about that AF is supposed to have cooked up for AI? And do you think that if the French Govt came to bat for AF, it wouldn't subtly remind India of the defense equipment and technology it needs?

Please do surprise us with your super secret knowledge regarding how Germany was able to get all the slots LH it needs but still wants more!

How about this simple explanation? LH has been flirting with AI, lifting her skirt a little at a time promising to go all the way with * Alliance. This is how it got all the slots it needs.
If LH has all the slots it needs, why does it need more?
I am not interested in a discussion about India Germany bilaterals, their limits and how Germany/LH plan to go around them. Once it's clear to GoI that LH is sneakily making a fool of them, there could be retaliation against LH. What I want to know is what was that deal you were talking about that AF has cooked up for AI to entice it to Skyteam?
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