What went wrong with Air India's entry into Star Alliance?

National carrier Air India (AI) is left in the lurch after Star Alliance denied the latter entry into the world’s largest network of 27 airlines linking 855 airports in 155 countries.
Listed below are key take-aways from the communication sent by Star Alliance to the civil aviation ministry on why AI's entry is rejected, according to sources.
AI as a brand is not considered up-to-the-mark in terms of service quality. AI did not take up brand-makeover exercise.
With 31,000 employees on-board, AI's aircraft-to-employee ratio is 1:280, which is unheard of in any international airline.
With a poor equity base of Rs 145 crore and mounting debts of around Rs 45,000 crore, AI's financial health is not considered sound.
Negative news from all quarters on AI was disliked by member countries at Star Alliance.
AI, as promised earlier, has not been able to hive off its engineering, maintenance and overhaul division into separate entities. Singapore Airline and Germany's Lufthansa work on a smart business model of having separate subsidiaries for allied activities to churn more revenues.
AI, after merging with former Indian Airlines in 2007, has made cumulative losses of over Rs 13,000 crore.
Of the 27 member airlines at Star Alliance, 25 voted against AI in July when the airline was due to join the global network.
02/08/11 Shaheen Mansuri/moneycontrol.com

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Categories: Air India Aug 2011, Foreign Aug 2011, New Aug 2011