Lufthansa expands Air India partnership under pressure from Gulf

.

• Lufthansa and Air India expand partnership to strengthen India presence
• Planned joint business aims to better coordinate routes and sales
• Lufthansa faces tough competition from Emirates and Qatar Airways

Did our AI summary help?

Deutsche Lufthansa AG expanded its partnership with Air India Ltd. as the German carrier pushes to extend its footprint amid heavy competition in one of the world’s biggest aviation markets.

The companies signed a memorandum of understanding to better coordinate routes and sales, Lufthansa said Tuesday. A planned joint business agreement, subject to regulatory approval, would build on their existing Star Alliance cooperation.

The move underscores Lufthansa’s growing reliance on India, which has become its No. 2 premium long-haul market after the US. The carrier has been investing in its premium offering, including its new Allegris cabin, in an effort to better compete with rivals, particularly those from the Middle East.

Carriers such as Emirates and Qatar Airways are capturing a large share of India’s international traffic, funneling passengers through hubs in Dubai and Doha and thus raising the pressure on Lufthansa’s higher-cost direct flights.

“It’s really hard to compete into India against those two airlines,” Bloomberg Intelligence analyst George Ferguson said, citing lower labor costs. “Pairing with Air India provides direct access to more markets around India.”

Air India also has some ground to gain, with the airline set to report a record annual loss and starting the search for a new chief executive officer after a deadly crash last year.

Lufthansa has repeatedly pushed back against the Middle East carriers, calling on the European Union to suspend its bilateral aviation agreement with Qatar, citing corruption allegations against the Gulf state that owns Qatar Airways.

And most recently, it criticized Emirates’ potential addition of Berlin to its route network, pointing to the one-sided burden on European carriers imposed by climate rules.