India's government has taken another step forward in its ambitious plan to merge Air India with Indian Airlines by deciding on the enlarged carrier's name, base and top management team.
Civil aviation minister Praful Patel, who has been the main architect of the proposed merger, says "Air India" will be the carrier's surviving name, ending speculation the government could compromise by opting for "Air Indian". However, a new livery will incorporate features of the corporate identities of both airlines.
The new entity will have its registered office in New Delhi, where Indian is based, while its corporate office will be in Mumbai, where Air India is based. The legal terms of the merger are expected to be completed in July, although integrating operations will take 18 to 24 months.
Air India chairman and managing director V Thulasidas will retain his titles at the enlarged carrier while his counterpart at Indian Airlines, Vishwapati Trivedi, will be joint managing director.
Patel says the merger will help the carriers compete more effectively against foreign and domestic carriers, which have been rapidly boosting services to and within India. Air India primarily operates international services using widebody aircraft, while Indian operates domestic services as well as short- and medium-haul international flights, mainly using narrowbodies.
"The greatest benefit of this merger is the integrated, synergised network which will make us stronger as one airline," says Thulasidas, adding the merger will free up capacity by eliminating duplication and enabling further network expansion. "We are looking at new services to places like South Africa, Australia, Beijing in China, for example."
Patel also hopes the enlarged Air India can proceed with an initial public offering next year. He says this is "very much on the cards" for 2008. Funds raised would be used in part to help add new aircraft to the fleet. Air India and Indian Airlines have 111 new aircraft on order with Airbus and Boeing, and Thulasidas says the merged carrier will look to place more orders for delivery beyond 2011.
The government forecasts at least RP6 billion ($136 million) in annual profit improvement within three years of the merger. It also says the enlarged airline will be more attractive to a multilateral alliance.
Source: Airline Business
