Air India and the Star Alliance (Part II)
Aug 7, 2011, 6:30 am
#346
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I don't think GoI would officially know who all voted against.
Here is a hypothetical situation. If AI can get its act together and lets say by the end of the year apply to *A again and this time they agree to allow 9W also to join would *A consider inducting AI again?
Here is a hypothetical situation. If AI can get its act together and lets say by the end of the year apply to *A again and this time they agree to allow 9W also to join would *A consider inducting AI again?
However, GoI and AI are never going to accept that compromise now...
Aug 7, 2011, 6:33 am
#347
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I do not think you are going to see as much vindictiveness on GOIs part as some OPs fear. The Prime Minister himself has said in Parliament that AI is in serious trouble, and that a solution will be a long term quest. India is a 3 trillion dollar plus economy and will not let tit for tat aviation diplomacy control or even impact its global positions significantly. Trying to penalise this or that airline or alliance would have precisely that effect which is why I dont think its going to happen
From all indications Jet and Kingfisher are free at this time to commence negotiations with OW and *A/Skyteam. What AI has lost is the negotiated first mover advantage and I think the mandarins realise that the state of AI is one in which insistence on this and thereby blocking another airlines entry into *A is simply infeasible
On the issue of landing rights bilats etc, these are generic negotiations (an interesting discussion in and of itself, involving factors which we have discussed elsewhere). But the determining decision on A380 slots into India is not going to be AI in my view. Even if it was a major factor in the past it will be much less of a factor now. The fact that AI is (businesswise) a zombie is now I think not contested even in the Bhavans of New Delhi. Were no employees blackmailing govt through opposition MPs, I also think you would have seen some tough decisions.
Even so, a "'cut losses"' attitude is at last beginning to emerge. One indication --- until recently the asset value of some AI debt was way above the risk premium warranted on nationalised Bank portfolios. The finMin has just moved a policy note that this bizarre decision be reversed. It has also taken an extremely toiugh position on equity infusions into AI and is literally having to be coerced by the PMO to hand out even the few slops that it is.
From all indications Jet and Kingfisher are free at this time to commence negotiations with OW and *A/Skyteam. What AI has lost is the negotiated first mover advantage and I think the mandarins realise that the state of AI is one in which insistence on this and thereby blocking another airlines entry into *A is simply infeasible
On the issue of landing rights bilats etc, these are generic negotiations (an interesting discussion in and of itself, involving factors which we have discussed elsewhere). But the determining decision on A380 slots into India is not going to be AI in my view. Even if it was a major factor in the past it will be much less of a factor now. The fact that AI is (businesswise) a zombie is now I think not contested even in the Bhavans of New Delhi. Were no employees blackmailing govt through opposition MPs, I also think you would have seen some tough decisions.
Even so, a "'cut losses"' attitude is at last beginning to emerge. One indication --- until recently the asset value of some AI debt was way above the risk premium warranted on nationalised Bank portfolios. The finMin has just moved a policy note that this bizarre decision be reversed. It has also taken an extremely toiugh position on equity infusions into AI and is literally having to be coerced by the PMO to hand out even the few slops that it is.
Aug 7, 2011, 8:59 am
#348
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I would be surprised to see Air India survive into 2013.
It is no longer a case of "if" but rather a case of "when". The recent cash infusion will carry them through the upcoming few months, but there will be another crunch in Q1 2012 and again in Q3 2012 that I highly doubt they will be able to make it through.
If the Government was smart, they would start planning for an orderly shutdown now rather than waiting for it to blow up in their face in a few months.
It is no longer a case of "if" but rather a case of "when". The recent cash infusion will carry them through the upcoming few months, but there will be another crunch in Q1 2012 and again in Q3 2012 that I highly doubt they will be able to make it through.
If the Government was smart, they would start planning for an orderly shutdown now rather than waiting for it to blow up in their face in a few months.
Aug 7, 2011, 9:20 am
#349
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I would be surprised to see Air India survive into 2013.
It is no longer a case of "if" but rather a case of "when". The recent cash infusion will carry them through the upcoming few months, but there will be another crunch in Q1 2012 and again in Q3 2012 that I highly doubt they will be able to make it through.
If the Government was smart, they would start planning for an orderly shutdown now rather than waiting for it to blow up in their face in a few months.
It is no longer a case of "if" but rather a case of "when". The recent cash infusion will carry them through the upcoming few months, but there will be another crunch in Q1 2012 and again in Q3 2012 that I highly doubt they will be able to make it through.
If the Government was smart, they would start planning for an orderly shutdown now rather than waiting for it to blow up in their face in a few months.
Aug 7, 2011, 3:51 pm
#350
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Meanwhile Nero fiddles while Rome burns...
Aug 7, 2011, 4:38 pm
#351
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Need to get you to North Block, Sean... Why dont you write an oped explaining this for one of the pink (business) newspapers, please, as a public service? I guarantee publication...
Here could you explain why cash crunch is worse in summer?
Here could you explain why cash crunch is worse in summer?
Aug 7, 2011, 5:45 pm
#352
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I'm sad that AI didn't make it into Star. I've not flown AI - when I was based in DEL my domestic flying was on 9W - so I can't comment on their service, but the route network would have helped me a little on some upcoming RTWs.
I'm now back to the drawing board trying to fit India and Nepal into the RWSTAR options without too much backtracking.
I'm now back to the drawing board trying to fit India and Nepal into the RWSTAR options without too much backtracking.
Aug 7, 2011, 7:35 pm
#353
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Airlines fund themselves with cashflow from future ticket sales, held on the books as an unflown service liability to tomorrow's passengers.
Peak seasons are when you have to deliver service to more passengers (hence more marginal cash outflow), while at the same time generating less cash from future ticket sales (since the peak season is followed by a lean season).
You have to carry a cash cushion that is greater than the difference between these two otherwise you start having cashflow issues. Air India has virtually zero cash on hand, so the cash crunch for them could be potentially fatal.
It is a house of cards. Once a single service provider moves to recover debts by seizing assets, everyone will follow within hours. Confidence in Air India's ability to survive is at an all time low right now, it wont take much to trigger the panic that can bring the house down.
Peak seasons are when you have to deliver service to more passengers (hence more marginal cash outflow), while at the same time generating less cash from future ticket sales (since the peak season is followed by a lean season).
You have to carry a cash cushion that is greater than the difference between these two otherwise you start having cashflow issues. Air India has virtually zero cash on hand, so the cash crunch for them could be potentially fatal.
It is a house of cards. Once a single service provider moves to recover debts by seizing assets, everyone will follow within hours. Confidence in Air India's ability to survive is at an all time low right now, it wont take much to trigger the panic that can bring the house down.
Aug 8, 2011, 12:43 am
#354
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AI not paying pilots
Any views on this and how this will affect possible *A membership. Ofcourse these arent the only issues that will affect *A member for AI but these seem to be the most curent hurdles.
Is there any chatter about 9W trying for *A?
Is there any chatter about 9W trying for *A?
Aug 8, 2011, 6:33 am
#355
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http://en.wikipedia.org/wiki/Air_India
Star Alliance announced on 13 December 2007 that it had invited Air India to join as a member. After several delays, the final joining date was set at 31 July 2011.[2][3][4]. Star Alliance claimed that Air India had failed to meet the minimum standards for membership for that deadline and as a result Air India's invitation to join the Star Alliance has been suspended. [5]. On the other hand, officials at the Ministry of Civil Aviation of India, said the rejection came after the ministry didn’t agree to a demand from the alliance to give Jet Airways the go-ahead to join the grouping.[6] Air India has also denied that the airline had not met the conditions prescribed for joining Star Alliance.[7]. Interestingly, informed sources within Star Alliance said that concerns on Air India's entry were raised by United Airlines and Air Canada, both the airlines have a code-share agreement with Jet Airways
Interesting. So I guess 25 out of 27 voted for and 2 against.
Star Alliance announced on 13 December 2007 that it had invited Air India to join as a member. After several delays, the final joining date was set at 31 July 2011.[2][3][4]. Star Alliance claimed that Air India had failed to meet the minimum standards for membership for that deadline and as a result Air India's invitation to join the Star Alliance has been suspended. [5]. On the other hand, officials at the Ministry of Civil Aviation of India, said the rejection came after the ministry didn’t agree to a demand from the alliance to give Jet Airways the go-ahead to join the grouping.[6] Air India has also denied that the airline had not met the conditions prescribed for joining Star Alliance.[7]. Interestingly, informed sources within Star Alliance said that concerns on Air India's entry were raised by United Airlines and Air Canada, both the airlines have a code-share agreement with Jet Airways
Interesting. So I guess 25 out of 27 voted for and 2 against.
Air Canada has an interline agreement with AI as well so what is your point!!!! AI is facing a daily loss of over Rs 28 crore rupees and it is paying Rs 9.1 crore per day in interest alone on various loans. The best course of action for the GOI is to cremate this monster before it destroys the lives of it's employees.
Last edited by djjaguar64; Aug 8, 2011 at 5:29 pm
Aug 8, 2011, 6:39 am
#356
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These are some of the reasons AI did not make it.....
Aug 8, 2011, 10:30 am
#357
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I'm sad that AI didn't make it into Star. I've not flown AI - when I was based in DEL my domestic flying was on 9W - so I can't comment on their service, but the route network would have helped me a little on some upcoming RTWs.
I'm now back to the drawing board trying to fit India and Nepal into the RWSTAR options without too much backtracking.
I'm now back to the drawing board trying to fit India and Nepal into the RWSTAR options without too much backtracking.
Qatar does go to KTM via Doha. (UA partner)
Aug 8, 2011, 10:39 am
#358
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One airline which benefits by AI not joining Star is CO/UA. AI is a direct competitor vs CO on Newark/JFK routes. Inflight product of AI is superior to UACO. Also AA is also breathing a sigh of relief.
There is still an outside chance that AI can be reinstated in a few months after all the dust settles down.
There is still an outside chance that AI can be reinstated in a few months after all the dust settles down.
Aug 8, 2011, 5:24 pm
#359
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Reinstated? They never were a member. I also doubt any reconsideration of AI's membership will happen in few months as AI's problems are too deep and severe. Now they can no longer count on the added income of *A feed.
Aug 8, 2011, 5:48 pm
#360
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Judging by numerous reports about AI staff (and a few personal experiences as well), I think AI staff deserve everything bad that may be in store for them.
[OK, go ahead, flame me]