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| | The Union cabinet on Thursday formally approved the creation of a single mega airline by the merger of the two state owned airlines — Air India (AI) and Indian Airlines (IA). The name and logo of the new jumbo entity, which will operate both international and domestic flights, have yet to be decided. By 2010, when the merger formalities are expected to be complete, the new airline will have a fleet strength of 112 aircraft, and a workforce of around 33,000. The hugely popular, turbaned "Maharaja", presently the mascot of AI, is likely to remain the mascot of the new airline as well. The merger, first mooted about a year ago, was referred to an empowered Group of Ministers (eGoM) headed by External Affairs Minister Pranab Mukherjee, which okayed the idea last month. "The merger of the two airlines will enable them to leverage their combined assets and capital better, and build a stronger and sustainable business," Parliamentary Affairs Minister Priya Ranjan Dasmunshi told reporters after the Cabinet meeting. With this approval, work on the legal and procedural formalities required to bring about the merger can begin. Civil aviation ministry sources said the process would take about 16 weeks. After the legalities are done with, it will take at least another 24 months for the two airlines to begin functioning as one. The merged entity will be among the top 30 airlines in the world, among the top 10 in Asia, and the largest in India. The low cost subsidiaries of AI and IA — Air India Express and Alliance Air respectively — will also become one, which, as a subsidiary of the new mega airline, will offer low cost travel in select domestic and international sectors. The merger blueprint prepared envisages the new airline being divided into six special business units (SBUs). These are maintenance, repair and overhaul (MRO), jetshop (which looks after aircraft appearance and upholstery), engineering, cargo, ground handling and low cost carriers (LCCs). Each SBU will be headed by a separate chief executive officer (CEO). Civil Aviation Minister Praful Patel has repeatedly assured the unions that no one will be retrenched, and that the working conditions, salaries, career prospects and so forth of all employees of both airlines will be adequately looked after. The cost of integration is estimated at around Rs 200 crore. |
