Air India in Star Alliance - what does it mean for us (and others)

The Indian skies (figuratively, of course) are full of news about the latest on Air India joining Star Alliance. The Board of Star Alliance decided to re-induct AI into *A earlier this week, and the official press release is here. AJ (Live from a Lounge) writes about it very succinctly, here.

A plan that was aborted in various stages - at least twice in the last 10 years - now looks more promising in terms of fruition. Star Alliance will take steps to integrate AI into the alliance, in terms of systems, processes, etc. This article from LiveMint suggests that the integration may well be completed in the next six months.

However, I'm not entirely sure I agree with this piece in DNA, about AI pipping 9W to the post, in terms of joining Star Alliance. Yes, there was a time a few months back, when there was talk of 9W joining Star Alliance. However, in retrospect, the most charitable thing I could say about them at the time was that 9W was simply casting the net to find (a) suitable partner/s.

Now that Jet has found Etihad (which if I may say, continues to have some troubles in terms of regulatory approvals), I would like to think that it is Star Alliance that is more keen on AI joining them, rather than the other way round. So, there is no "AI pipping 9W" - instead, Star Alliance may well be desperate!

What's in it for me?

Statistics wise, Star Alliance is the largest airline network, offering 21,900 flights a day to over 1300 airports in 195 countries. AI flies to 90 destinations total, including 31 overseas, and has 15 codeshare partners already. In fact, even now you can post your miles to SQ's KrisFlyer or LH's Miles & More programs, when you book AI tickets or check in online. So, what does this mean for us? Simply put, this means access to the entire Star Alliance network for AI passengers, and integrated and seamless inbound travel for *A passengers into and within India. In addition, there is the ability to redeem miles across the *A network. For elites, *A's lounge access policy and status benefits will be great benefits to have.

My take on AI

I wasn't a big fan of AI in the past. But to be fair, AI's service in recent times has improved drastically from the days of yore, and I've myself had a couple of good experiences with them recently - you can read about those here and here. As a corporate consultant, I've seen that in all cases, a turnaround requires both intent and ability, and in most cases, it is the ability that is lacking. However in the case of AI, I believe that they have the ability - it is just that there is no intent, for various reasons that I will not get into right now. AI also has a great co-branded credit card product with SBI, which I've written about that you can read about here and here. They've also begun to see a bit of grey (if not black) in the last few months, which is certainly better than the bleeding crimson red that their balance sheets showed up until a few years back. I strongly believe AI is on the right track, and the *A membership will only further boost their financials - as long as they get their performance right.

Effect on Jet

I'm thinking of what effect this could have on Jet. At first, it seems that AI will need to do some really serious socks-pulling-up, and get their act together with *A, and Jet needn't really worry about it, particularly with their Etihad deal virtually in the pocket. However, if you go beneath the surface, you will see that Jet has a total of 28 airline partners, of which 10 (Air New Zealand, ANA, Austrian, Brussels Airlines, Lufthansa, South African, Swiss, Turkish, United, and US Airways) are currently Star Alliance members. Four of those (ANA, Brussels, South African and United), and Air Canada, are also interline partners. Jet will have to lose them, which isn't great news for Jet. Therefore, I'm not sure what the effect of the AI-*A news will have on Etihad's views on investing in Jet - not much is what I think, but I'll admit that I'm only guessing.

And finally

So, where does all of this leave us? The news of AI joining *A is great, but AI needs to buckle up and come up to scratch to keep the deal alive, and (if and when it actually joins and integrates) to keep their membership continuing. I'm of the view that joining Star Alliance can only be very good for AI, and reasonably bad news for Jet. But as with everything else in the Indian skies, there's nothing that one can be sure of. So, fingers crossed...lets wait and see!

So, what's your take?