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Mar 2007

AI, IA merger to be completed by 2009

     New Delhi: The Centre today said that the merger of two national carriers, Air India (AI) and Indian Airlines (IA) would be completed in a phased manner over next two years. Union Civil Aviation Minister Praful Patel also assured that there will be no retrenchment and that all employees would continue in the merged company. "I am, happy to announce that the Government has decided to merge the two airlines AI and IA into a new company, which would further strengthen the public sector airlines. The merger would be completed in a phased manner over next two years. There will be no retrenchment and all employees will continue in the merged company," Patel said here. Patel expressed hope that the merger would result in net benefit of Rs 600 crores at the end of third year. "However, in the past decade, their market position has been adversely affected due to intense competition and their inability to induct new fleet. Further, there has been a growing tendency of consolidation and merger in the civil aviation sector, which enables the airlines to achieve synergies and reduce costs", Patel added. He also informed that the Government has already approved the induction of 68 new aircrafts by Air India and 43 new aircrafts by Indian Airlines.

     Patel said that the new airlines, with about 112 aircraft and with both international and domestic footprint, would set fresh benchmarks for efficiency and reliability. The technical and procedural formalities for merging the two airlines would begin immediately. Within the next four months, the ministry would come out with one company name, one brand, one logo, one code and single financials. Commenting on the issue of the employee's welfare, Patel said, "While taking this decision, employee interests have been foremost in our mind. The Government is committed to ensure that all legitimate employee interests, including their current compensation, status etc. are protected. A well-defined Grievance Redressal Machinery will also be put in place." Speaking at the Rajya Sabha today, Patel said, "Airports Authority of India (AAI) has formulated policies for developing domestic airports for international cargo handling and for establishment of centers for perishable cargo at airports." Pointing out that expatriate pilots would not outnumber Indian pilots, Patel said, "Airlines in India are allowed to bring expatriate pilots only on the basis of their plan for phasing out foreign pilots and training Indian pilots to replace the foreign pilots and training Indian pilots to replace the foreign pilots. Therefore, expatriate pilots are not poised to outnumber their Indian counterparts."

     He also informed that at present there are approximately 560 foreign pilots in India. The ratio between Indian and foreign pilots is currently 6:1 approximately. "The Government has taken various steps to reduce the gap between demand and supply of skilled Indian pilots. These include, conditionally increasing the age-limit to 65 years for exercising the privileges of their licenses for commercial transport operations, up gradation and modernization of training infrastructure of Indira Gandhi Rashtriya Uran Akademi (IGRUA) to enhance its training capacity, setting up of a world class flying training institute at Gondia, Maharashtra and assistance to flying clubs by allocating trainer aircraft through Directorate General of Civil Aviation/Aero Club of India," Patel added.
-Mar 2, 2007