Airlines India, Indian Airlines

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.

The Bombay High Court on Monday adjourned for next Thursday, hearing on an arbitration petition filed by private carrier Jet Airways in connection with the failed deal to takeover rival Air Sahara.
“The petition will be heard on September 21 considering the urgency of the matter,” Jet Airways counsel Janak Dwarkadas said after Justice D K Deshmukh listed the matter for hearing on Thursday.

He said all cases related to the failed Rs 22 billion deal have been transferred and would be heard by the Bombay High Court following a direction from the Supreme Court in this regard.

Jet Airways submitted that it was losing Rs 2.2 million per day on account of its funds being locked due to the collapsed deal.

As part of the deal, reached in January, Jet had paid Rs 1.8 billion for revival of Air Sahara and Rs 5 billion in lieu of Air Sahara shares pledged with it, besides deposited Rs 15 billion in the escrow account opened for the purpose.

After the deal fell through over absence of regulatory clearances on June 21, Sahara moved a court in Lucknow seeking to bar Jet from operating the escrow account.

In all, four petitions (two by Sahara Group and as many by Jet) are pending in connection with the matter.

The Supreme Court had on August 28 ordered transfer of all petitions filed by Sahara group in a Lucknow court to the Bombay High Court.

The apex court, however, ruled that the interim injunction granted by the Lucknow district court restraining Jet from withdrawing money from the escrow account would continue till further orders were passed by the High Court.

The civil aviation ministry is likely to move a Cabinet note on the proposed merger of public sector carriers Air-India and Indian Airlines in November after it receives a report from consultancy firm Accenture.
“There are no impediments in the process. Everything is going on as planned,” civil aviation minister Praful Patel said.

He said the consultancy firm, appointed to prepare a roadmap for the merger of the two carriers, would submit its report by October.

“We hope the Cabinet note on the matter should be ready in November after we receive this report,” Patel said in response to questions, adding that the proposed merger process was moving on track and would be completed as planned within the current financial year.

Official sources said there were some key areas like human resources, operations and infrastructure, which needed to be looked into in greater detail, before the proposal could be finalised. A decision on the future of their subsidiaries, Alliance Air and Air-India Express, would also have to be taken, the sources said.

The merger of Air-India and Indian Airlines will create a mega carrier with about 130 aircraft.

The aviation job market in India is all set to boom. Even as new kids on the block vroom impatiently on the sidelines, aviation behemoths AI and IA are all set to rock the skies with 111 mint-fresh planes and an additional 4,300 jobs in key categories such as pilots, engineers and cabin crew over the next few years. Both airlines have made detailed plans in this regard.

In fact, a look at just the growth of these two airlines which, till now, were struggling to stay ahead of the wannabes with leased and old planes, gives an indication of what India, among the fastest aviation markets, is poised for.

Boeing forecasts say India will require close to 500 new aircraft over the next 20 years with a total value of around $36 billion.

Yes, infrastructure glitches will continue for some time, but the customer will continue to be king.

AI placed one of the largest commercial airplane order in India’s civil aviation history with 68 Boeings (50 for Air India and 18 for Air India Express) in December 2005, valued at over $11 billion. Delivery of this assorted mix of 23 777s, 27 787s and 18 737s is scheduled to begin in November 2006.

“Air India alone, over the next seven years, will require 700 additional pilots. Total cabin crew numbers till 2012 will stand at 4,974 for 58 AI planes,” says an AI spokesman.

“To meet the shortage of pilots, Air India has adopted the following strategy: induction of trainee pilots from the open market and Indira Gandhi Rashtriya Udaan Academy, Rae Bareli; recruitment of foreign pilots and co-pilots on contract, recruitment of science and engineering graduates who will be trained for commercial pilot licences;
extension of contract for retired Air India pilots till 65 years and induction of Indian Air Force pilots on deputation,” he says.

At Indian Airlines too, many jobs will be up for grabs. It had inked a deal to buy 43 Airbuses for $2.2 billion and will get its new fleet of 19 A319s, four A320s and 20 A321s on a staggered basis.

“Recruitment of additional work force has been worked out, keeping in mind aircraft delivery schedules and has been going on for almost a year,” says a spokesman.

“The total plane strength in the next four years will be under 100.” Old and leased planes will be phased out.

“The airline may also need to recruit flight dispatchers, ground handling and passenger handling staff, though this would largely depend on policies regarding airport handling and the impending merger of IA and AI,” the spokesman says.

In the intervening period, to ensure greater productivity, IA signed an agreement with its pilot’s union to increase flight and duty timings and number of landings.

Rest period was also decreased, keeping DGCA norms in mind. “Retiring pilots will also be kept on contract till
65 years. Indian Airlines has also approached the government for similar contracts for AMEs and flight dispatchers,” he says.

With the induction of the new fleet, IA also expects to increase its present market share of 22%. The skies are truly opening up for high-flying jobseekers.

At the moment, only Air India sends passenger profiles to immigration authorities at Indira Gandhi International Airport.

Though other international airlines have agreed in principle to provide information to Indian authorities under the new system, they would take some time before integrating with the India Advance Passenger Information System (APIS) Data Centre.

“Once India makes APIS fully functional after issuing an official notification, pilots of every international airlines have to obey it. Pilots not complying with the requirement will be liable for punishment,” the official said.

Such defaulters can be punished with imprisonment up to five years and fined under provisions of section 14 of the Foreigners Act, 1946.

The government, on its part, will keep the passenger profiles confidential. The data will not be shared with any organisation except the security agencies.

Besides India, APIS is currently operational in 10 countries including USA, Canada, Australia, New Zealand, Bahrain, South Korea, China, Mexico, South Africa and Japan.

It’s not immediately clear whether a similar system put in by UK earlier this month is part of APIS.