Lufthansa banks on Air India to check Gulf carriers

The impending entry of Air India into Star Alliance, the biggest grouping of airlines globally, has got Lufthansa excited as it may help the German carrier check the growing dominance of Gulf carriers in Indian skies.

Air India's entry into Star alliance, which was mentored by Lufthansa, is likely to be a reality by July. Wolfgang Will, director, South Asia for Lufthansa, recently in an interview told dna Air India's entry would benefit both airlines in terms of giving access to newer geographies. "They (gulf carriers) are growing and we respect that. But that does not mean we should be afraid because we feel that, you can sell your product well on the basis of good quality and reach," he said.

According to a report by aviation consultant, Center of Asia Pacific of Aviation (CAPA), the recent rise of Emirates, Etihad (now with Jet Airways) and Qatar Airways in carrying Indian traffic over their highly effective hubs and across their diverse global networks has completely changed the shape of the Indian long?haul market, as it has in many other markets. "Air India's entry will be beneficial for both airlines, as we will able to reach out to much more customers as before. For us, we will able to tap the Indian market beyond big cities and Air India will have larger access to the European region and beyond. Not only this, it's an advantage for the customer. You can earn miles in one programme and redeem them in another. So yes, that is one of the ways to fight back and compete, and be one of the strongest players in the market," Will said.

Lufthansa has been the key driver of Star's renewed interest in Air India. "We think you need to have a local partner in such a market. And we are also convinced, that Air India will benefit as part of Star Alliance as it gives them a better platform and will result in strengthening of the airline," said Will.

The German carrier had been cultivating a framework of cooperation with Air India for many years, with a view to developing long-term strategic opportunities. "Those ambitions frayed between 2008 and 2011 as Air India's performance deteriorated following its merger, and as the carrier became increasingly consumed by its own internal challenges. But the changing environment left no option but to resume those earlier plans," the CAPA report said.

Air India, which announced its entry into the Star Alliance December last, likely lost $720?750 million in fiscal 2014, as per CAPA estimates. "That is down almost 40% from two years ago, but this may be as good as it gets as competition in both the domestic and international arenas is set to intensify," the report said.