The proposed merger of government-owned Air-India and Indian Airlines is close to being a done deal, after important Cabinet approval was secured early in March.
Cabinet approval came days after a high-level group of government ministers that had been giving advice on the proposed merger formally supported it.
The merger has been pushed most strongly by civil aviation minister Praful Patel, who has said it is necessary in order for the state carriers to compete with emerging private airlines at home and from abroad.
The initial target for completion of basic merger formalities was the end of March but this has been pushed back by several weeks.
Patel says the operational integration of the carriers will be completed in a phased manner over the next two years. He adds that "the technical and procedural formalities for merging the two airlines would begin immediately and one company with one name, one brand, one logo, one code and single financials is expected to be in place" before the end of June.
"This new airline, with about 112 aircraft, with both an international and domestic footprint, would set fresh benchmarks for efficiency and reliability, thus benefiting the civil aviation sector in the country, especially the travelling public," he adds.
Patel says no employees will lose their jobs and he is forecasting at least Rs6 billion ($136 million) in annual profit improvement in three years. "We expect to put in place an airline which would be comparable to any other major airline, at least in this region," says Patel.
Mumbai-based Air-India operates mainly international services using widebodies while Delhi-based Indian Airlines operates domestic services as well as short- and medium-haul international flights, mainly using narrowbodies. Air-India also has an international low-cost subsidiary called Air India Express while Indian Airlines has a domestic subsidiary called Alliance Air.
Source: Airline Business
