Indian and Air-India merger on track, Indian Civil Aviation minister says
Responding to indications that Prime Minister’s Office (PMO) in India has objected to the proposal to merge Indian and Air-India, the Civil Aviation Ministry has confirmed that there are no impediments in the process related to the merger of the two state-owned carriers. In fact, the Civil Aviation Ministry is likely to move a cabinet note on the proposed merger in November this year.
“There are no impediments in the process. Everything is going on as planned,” Civil Aviation Minister Praful Patel said. He added that Patel the proposed merger process was moving on track and would be completed as planned within the current financial year 2006-07.
Patel’s remarks follow a local media report, which shared that a composite note prepared by the PMO, comprising comments from the finance and commerce ministries, stated “the proposal in its current format is not viable because the two airlines were set up for different purposes and a merger will weaken their position in the domestic and international markets.”
But going by the merger process, the consultancy firm Accenture, which has been appointed to prepare the roadmap for the merger, is expected to submit its report in October. As per the information available, the Accenture consortium which includes Ambit Corporate Finance has been given a mandate to prepare a detailed blue-print for the merger within 26 weeks.
Among the issues titled in favor of merger are - economies of scale when it comes to maintenance, ground operations, the use of landing slots and parking rights. Also, the single entity can effectively deliver the classic hub and spoke system that the largest airlines have been operating.
The carriers are also expanding their fleet. Indian has already placed an order valued at US$2.2 billion, for 43 Airbus A320 family aircraft comprising 19 A319s, four A320s and 20 A321s. Air India, too, signed a deal with Boeing Commercial Airplanes, ordering 68 aircraft, earlier this year.