LH Sees Alliance With Air India A Restraint To Gulf Carriers

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LH Sees Alliance With Air India A Restraint To Gulf Carriers
Aviation Daily Dec 21 , 2009 , p. 18
Neelam Mathews

Lufthansa views its partnership with Air India as a line of attack against the hasty growth of Gulf carriers that are fast eating up market share of Indian and European carriers by offering cut-throat fares and using the Dubai hub successfully to divert onward traffic to the East Coast of the U.S. and Europe.

“We will not be able to push them [Gulf carriers] out of the market. We’re maintaining our market share [for the moment]. Also, there are limits to growth of the Gulf carriers. However, we not underestimate their power,” Karl Ulrich Garnadt, member of the Lufthansa Board told The DAILY.

Garnadt was responsible for Network Management at Lufthansa for five years up to 2004. He was also group representative and head of hub management in Munich and instrumental in signing an agreement with Air India in 2004 that resulted in code sharing and Lufthansa’s agreeing to provide a prime-time slot for Air India at Frankfurt to improve connectivity to U.S. and Europe.

On the signing of the bilateral cooperation, Wolfgang Mayrhuber, chairman of the executive board of Lufthansa, said, “We are banking on the dynamism of this market and can see considerable potential through the cooperation.’ He also said that India-Germany/Europe and India-U.S. were very important markets for Air India, which plans to serve them over Frankfurt in alliance with Lufthansa.

Currently, 350 weekly joint flights are operated to and from seven destinations in India to Germany, Europe and the U.S. And while Lufthansa’s 52 weekly flights to India make up 25% of all its flights to the Asia/Pacific region, the cooperation hasn’t been without its challenges. In 2009, Air India delayed by a year its plans to join the Star Alliance because the IT merger between Indian Airlines and Air India had not transpired. If Air India would have joined Star during the crisis period of the past year, it would have cut costs and helped stem the flood of capacity unleashed by Gulf carriers, said an airline official.

While Garnadt said the main priority and the joint vision was with Air India, he added Jet Airways was an option being considered as a second Star partner. At Lufthansa, priorities are clear. Now Emirates is connecting three times daily to Dubai. Gulf carriers will take away our business, and we, too, will suffer if Air India does not do the merger soon. We believe in working with partners..

Garnadt did acknowledge not all things had materialized with Air India. We received reasonable success with Fraport operations, he added.

Air India made Frankfurt its hub for the western countries last year.