Pune Stock：Air India, Lufthansa deepen ties in 'rare' code-sharing pact

Tata-owned Air India and Lufthansa have strengthened their relationship with the German major expanding their code share agreement on the popular India-Australia route.

Under this new pact, passengers of Lufthansa, from its hub in Frankfurt and Munich, will be able to travel to Sydney and Melbourne via Delhi and Mumbai airports on Air India.

Similarly, Swiss Airlines, owned by the Lufthansa group, will partner with Air India where passengers from its hub in Zurich will be able to travel to Sydney, Melbourne, and Kathmandu on Air India through Delhi Airport.

This is a rare occasion where Lufthansa has agreed to place its code on Air India flights for international routes, say experts.

The German carrier has a joint venture with Singapore Airlines (SIA) for Europe to Australia routes where it doesn’t fly directly.

Tata group and SIA are restructuring their airline business in India which will see the merger of Vistara into Air India in which SIA will own a 25.1% stake.

The partnership, said industry sources, could be a sign of greater cooperation between the two airlines as Air India has started improving its inflight product with refurbished aircraft and better airport services.

Lufthansa CEO Carsten Spohr had earlier told ET that they are looking to form a strong partnership with Air India for growing its business in India.Pune Stock

“Our India expansion strategy is two fold. The first is to expand as a Lufthansa group through our own aircraft. The second pillar is to work closely with Air India. With Tata and SIA being the new owners, it's a changed Air India and we are looking for a strong partnership,” Spohr had said.

Ameya Joshi, founder of aviation blog Network Thoughts, said that the new agreement shows that airlines are willing to do business with Air India based on its refurbishment plans.

“Lufthansa wants to have the first mover advantage for more co-operation and business, especially when both the airlines fly to Frankfurt from Delhi and with Vistara, also from Mumbai.”

Sources said that the two airlines were working towards a metal neutral joint venture on routes between India and Europe where revenue earned by both airlines will be shared irrespective of whose aircraft it is.Hyderabad Wealth Management

Over the years, Lufthansa has faced stiff competition from Middle Eastern airlines like Emirates and Qatar Airways who have eaten into the market share of European airlines through cheaper fares and premium products.

However, people aware of the development said that such a partnership will take time and depend on how fast Air India can refurbish their product.

Air India CEO Campbell Wilson had previously said that the airline will spend $400 million refurbishing its Boeing 777 and 787 wide body aircraft. Currently, it operates the 777s owned by Delta and Etihad which are more premium than the airline’s original product.

Sources said that Air India will increase its flights to Australia if the partnership gets a good response.

Lufthansa flights to Australia will take 30 hours with a layover of more than eight hours at Delhi Airport.Chennai Stock

In comparison, a Lufthansa passenger travelling on a code share flight with Singapore Airlines will take 23 hours with a layover of two and half hours at Changi Airport.

“It’s a small beginning but a big potential to build international to international traffic. Air India may look to increase flights or align timings with Lufthansa if there is a very good response. Delhi Airport should also work on improving their infrastructure so that passengers taking transit flights find it easy,” said an airline executive.

Mumbai Wealth Management