British Airways looks at non-equity alliance

British Airways (BA) on Tuesday said it is in talks with Indian carriers to forge an alliance, but will not make any equity investment in domestic airlines.

“We have held talks with Indian carriers, but talks so far have been inconclusive,” said Judy Jarvis, who has recently taken over as regional commercial manager, South Asia, British Airways.

She said talks are still on, but didn’t disclose the name of the potential partner and whether the airline is negotiating with a full service or a low-cost Indian carrier.

Ms Jarvis also declined to give details of the proposed partnership, but said it will not involve any equity investment by British Airways. At present, Indian rules don’t allow foreign airlines to hold equity in the domestic airlines or to operate in domestic routes directly. A government panel is currently considering the civil aviation ministry’s proposal to allow foreign airlines to hold up to 25% stake in domestic airlines.

Usually, a non-equity alliance between two airlines involve sharing of seats, complementing routes and technical collaboration, which together help airlines rationalise costs and offer fliers better value. In October, India’s two leading airlines, Jet Airways and Kingfisher, announced an alliance that would involve sharing seats, staff and infrastructure.

British Airways, one of the largest foreign airlines operating in India, recently pulled out of Kolkata, where it operated three international flights a week. Ms Jarvis said the company had no plans to further cut routes or flights, but is watching the market demand for reducing the number of seats being made available to the travellers to India. Following its exit from Kolkata, the company operates 45 flights a week from India.

The global manpower rationalisation plan announced by British Airways may also affect its Indian operations, said Ms Jarvis, but added that it will take more than a month to fathom the extent of the impact.

Indian aviation industry, like other world markets, is going through a turbulent phase. The economic downturn has taken its toll on air travel and many travellers have migrated from the pricier business class to economy class seats. Indian airline industry is estimated to post a loss of $2 billion for the year ended March 2009.

Ms Jarvis said her aim would be to consolidate British Airways’ position in India by focusing on better utilisation of resources and get more people to fly.

Source: The Economic Times 29/04/09


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