NEW DELHI: The apprehension of global airlines when Abu Dhabi-based Etihad confirmed stake purchase talks with Jet Airways that the Gulf carrier is planning its own informal alliance has proven true. Etihad president and CEO James Hogan said in US on Wednesday that "legacy airline alliances have outlived their usefulness". He said Etihad's equity alliance of minority shareholdings enabled the airline to enter markets, without the complexities attached to mergers or larger investments.
Star Alliance top brass had voiced this concern to Air India brass last month when they met to discuss AI's entry into the alliance. Etihad is in talks with Jet to acquire a 24% stake. However, fears over safety of their investment in India - after compatriot Etilsat's fate - have held up the deal. None of the three major alliances - Star, Oneworld and SkyTeam - have an Indian partner yet, while they have been trying for years. The problem is the aviation ministry's unwritten pre-condition that they can take an Indian carrier on board only after accepting AI into the fold. Considering the condition of the Maharaja, Star backed out.
"Now if the Jet-Etihad deal goes through, a Gulf carrier from Abu Dhabi will get access to the massive Indian market. Emirates gets a majority of its flyers from India through the large number of flights the airline was allowed to operate to numerous Indian cities during UPA-1. The competition will get tougher for other foreign carriers," said an Indian airline official.
Etihad's formal announcement of sewing up alliances by buying stakes in airlines across the world (like the Jet deal) could help AI. Now AI is the only full service carrier from India that can join the network. Kingfisher was supposed to join Oneworld but the airline is grounded for now. Alliances, especially Air France and KLM-led SkyTeam, have been looking for having an Indian LCC (low-cost carrier) on board. But they were informally told to first accept AI before getting any other desi player.
On the other hand, Hogan has said that Etihad's business model, which is a combination of organic growth, codeshares and minority equity investments, was proving very effective in building passenger numbers, revenue and profit for all its partners. Etihad owns 29% of airberlin; 40% of Air Seychelles; 9% of Virgin Australia and under 3% of Aer Lingus. "It is easier, faster and far more cost effective to grow through one-on-one partnerships with established, respected carriers than it is to rely totally on our own resources, and to start from scratch in every market we serve."
http://timesofindia.indiatimes.com/business/india-business/Legacy-airline-alliances-have-outlived-their-usefulness/articleshow/19389719.cms
Star Alliance top brass had voiced this concern to Air India brass last month when they met to discuss AI's entry into the alliance. Etihad is in talks with Jet to acquire a 24% stake. However, fears over safety of their investment in India - after compatriot Etilsat's fate - have held up the deal. None of the three major alliances - Star, Oneworld and SkyTeam - have an Indian partner yet, while they have been trying for years. The problem is the aviation ministry's unwritten pre-condition that they can take an Indian carrier on board only after accepting AI into the fold. Considering the condition of the Maharaja, Star backed out.
"Now if the Jet-Etihad deal goes through, a Gulf carrier from Abu Dhabi will get access to the massive Indian market. Emirates gets a majority of its flyers from India through the large number of flights the airline was allowed to operate to numerous Indian cities during UPA-1. The competition will get tougher for other foreign carriers," said an Indian airline official.
Etihad's formal announcement of sewing up alliances by buying stakes in airlines across the world (like the Jet deal) could help AI. Now AI is the only full service carrier from India that can join the network. Kingfisher was supposed to join Oneworld but the airline is grounded for now. Alliances, especially Air France and KLM-led SkyTeam, have been looking for having an Indian LCC (low-cost carrier) on board. But they were informally told to first accept AI before getting any other desi player.
On the other hand, Hogan has said that Etihad's business model, which is a combination of organic growth, codeshares and minority equity investments, was proving very effective in building passenger numbers, revenue and profit for all its partners. Etihad owns 29% of airberlin; 40% of Air Seychelles; 9% of Virgin Australia and under 3% of Aer Lingus. "It is easier, faster and far more cost effective to grow through one-on-one partnerships with established, respected carriers than it is to rely totally on our own resources, and to start from scratch in every market we serve."
http://timesofindia.indiatimes.com/business/india-business/Legacy-airline-alliances-have-outlived-their-usefulness/articleshow/19389719.cms
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