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IA, A-I operational merger being weighed

BS Corporate Bureau in Mumbai

The ministry of civil aviation is considering integrating the operations of the two national carriers, Air-India and Indian Airlines. It is also thinking of hiving off operations - maintenance, engine and avionics overhaul - of the two companies into separate companies. The proposal is meant to improve the performance and overall efficiency of the two national carriers.

Senior Air-India executives said, "The idea is to operationally synergise the two national carriers and further strengthen the overall position of the carriers in the industry. The process will include a pooling of fleet resources. The route network of the two airlines may be integrated and redesigned to ensure higher aircraft utilisation."

Also, such integration will enable the Centre to utilise unused bilaterals. Around 50 per cent of the bilateral rights remain unused, sources said. Interestingly, the Centre has bilateral rights to operate flights to 96 countries but exercises these rights to operate flights to only 47 nations. Currently, Indian Airlines operates some of the bilateral rights and flies international destinations, including the Gulf/Middle east and south east Asia.

Air-India has a fleet of six B747-400s, four B747-200s, two B747-300s (Combi), thirteen A310-300s and two A300-B4 aircraft. It also inducted five A310-300s on dry lease between December 2001 and March 2002.

Air-India operates about 121 flights a week. However, Indian Airlines, together with its fully owned subsidiary, Alliance Air, has a fleet of 56 aircraft, eight wide-bodied Airbus A300s, 34 Fly-by-wire Airbus A320s, 11 Boeing 737s and 3 Dornier D-228 aircraft.

The ministry has already invited bids from consultants for making recommendations for a financial restructuring strategy and preparing a 15-year business plan for the national carriers.

The ministry will also be benchmarking both the airlines in various areas of airline performance with the performance of competitors like Thai Airways, Singapore Airlines and Lufthansa. Industry sources say the ministry's gameplan is to improve not only the relative efficiency of the airlines but also improve their valuations before divestment.

The consultants are expected to work out a scheme keeping in view the existing bilateral agreements, profitable and unprofitable domestic routes, hub and spoke requirements and optimum utilisation of the existing fleet of both the airlines.

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