Air India/ Lufthansa alliance

Air-India is planning a comprehensive commercial alliance with Lufthansa to boost its business in the European and American markets.

Preliminary negotiations with the German carrier have been completed and Air-India chairman K Roy Paul is visiting Frankfurt next week to discuss tie-up details. The proposed collaboration will enable Air-India to market various destinations in Europe and the US which are connected by Lufthansa from its Frankfurt hub.

The primary goal of the proposed commercial alliance is to increase Air-India’s market share on the India-US route to 25% as compared to the 12% at present, the new civil aviation minister, Rajiv Pratap Rudy, has been informed. During a presentation here on Thursday, Air-India officials briefed the minister on efforts to improve the product offered by the national carrier. The alliance planned by Air-India with Lufthansa is expected to be far stronger than the current tie-up with Air France.

While bids to tie up with the Star Alliance or One World — major collaborations operated by leading airlines did not materialise, Air-India has been operating a code-sharing arrangement with Air France successfully. The proposed tie-up with Lufthansa will have a major impact since the German airline has the largest presence in India among all European carriers.

Though talks of a strategic alliance for Air-India has focused primarily on European carriers, the only player to show serious interest in picking up equity stake in the national carrier, when the privatisation plan was moving forward, was Singapore Airlines. The proposed collaboration with Lufthansa is significant since Air-India has restored its connectivity to Frankfurt, a key hub, which was cut off a couple of years ago to cut costs. Now that flights to Frankfurt have been reintroduced and more connections to the US have been mounted through Paris, Air-India’s European operations have gained strength.

Once the tie-up is finalised, Air-India will be able to offer connectivity to smaller European centres through Frankfurt. As of now such connections are being provided through Paris. Such connectivity helps Air-India to compete better with Europe-based carriers. Air-India also plans to attract the corporate sector by launching a platinum card with new features. The first class and business class sections of Boeing B747-400s — which are operated on the Europe, US sectors — are also being improved with sleeperettes. The airline also plans to improve the interiors of its Airbus A310 aircraft. Further dry lease of both B747-400 and A310 is on the cards to meet fleet expansion. Improvement of meal service and upgradation of inflight crockery are also being worked out for overall product enhancement.