Merger

Tuesday, July 22, 2008


In an attempt to develop responsible and active citizen and promote a clean environment, Air India has taken up an innovative venture of encouraging students and teachers alike in nation-building exercise as part of the airline’s pan-India corporate social responsibility initiative. To merge the two national carriers — Air India and Indian (Airlines) — have been talked about for quite a few years now, without any concrete follow up measures. Now Civil Aviation Minister Praful Patel has announced the setting up of a Group of Ministers to finalise the plans and complete the process by the end of the current financial year. There has been a prolonged debate on the future of these national carriers — does it lie in privatisation, taking in a strategic partner, bringing about synergy between the two airlines, or a full merger? The question of privatisation no longer seems to be on the agenda, and the Government of India is not talking any more of the strategic partner option. The attempts to foster some synergy in the operations of the two airlines were not exactly fruitful. Both airlines lost substantially on their market share. The single entity created by the merger will be in a position to face up to the growing competition in the skies. Unfortunately, successive governments at the Centre rather unduly deferred the expansion plans of the two airlines, leaving them to manage with their ageing fleet. Both Air India and Indian have now firmed up the plans and Indian's first A 319 aircraft from Airbus has just arrived. Air India has formed a subsidiary, Air India Express, as a low-cost regional or international airline. Officers and staff of both airlines have expressed certain reservations over the merger and these need to be sorted out.
The task before the Group of Ministers is clear. It has to take the management and employee unions of both airlines into confidence and address their concerns. They have to be taken fully on board to ensure that a public sector player can be efficient and competitive, to take on the challenge of private airlines. Without delaying it any further, the Government must complete the processes before the end of the financial year. Telecommunications and insurance are the two areas where the public sector has demonstrated it can remain competitive in a liberalised environment. This, along with the recent success story of the Indian Railways, will also prove the point that public sector undertakings can be efficient and profitable. At a time when most, if not all, airlines are running up losses because of the fare wars and the burdensome increase in fuel costs on account of the abnormal rise in oil prices earlier this year, there can be no logic in duplicating efforts and adding to costs. A consolidated national carrier must look to dramatically improving the quality of its service to passengers and customers. A new service culture needs to be inducted along with the new aircraft if the public sector airline is to give a good account of itself

1 comments:

Narain said...

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