NEW DELHI, India – 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.