Star Alliance shelves plan to induct Air India

MUMBAI (Reuters) - State-run Air India's plan to join Star Alliance, a consortium of global airlines, has been put on hold as the loss making Indian carrier had not met the minimum joining conditions.

Star Alliance, formed in 1997, is a consortium of 27 member airlines including Lufthansa, Air Canada <ACa.TO>, Singapore Airlines <SIAL.SI>, and Thai Airways <THAI.BK>. It has a fleet of more than 4,000 aircraft at present serving 185 countries.

Star Alliance has certain minimum joining requirements, which involve development and testing systems and procedures to harmonize the product with other members.

"The member airlines of the Star Alliance network and Air India have jointly concluded that the integration of Air India into the global airline alliance will be suspended," the statement by Star Alliance said.

"This is due to the fact that Air India has not met the minimum joining conditions that were contractually agreed in December 2007."

Joining the Star Alliance network would have given Air India a chance to strengthen its international operations as well as given it a brand boost.

Air India has not posted a profit since merging with another state-run carrier Indian Airlines in 2007 and is in talks with 26 Indian banks to restructure $4 billion of working capital debt.

It lost more than $1 billion in the year that ended in March 2010, the last year for which it posted figures. Its ranking in terms of domestic market share has dropped to fourth from third, behind private sector rivals Jet Airways <JET.NS>, Kingfisher Airlines <KING.NS> and budget carrier IndiGo.

"As far as I know Air India had met all the conditions, an Air India official, who declined to be identified, said.

An Air India spokesman did not comment immediately.

Star Alliance said its members would continue to provide assistance to Air India and a potential alliance membership at a future stage may be discussed.

(Reporting by Aniruddha Basu; Editing by Subhadip Sircar)