MUMBAI: The Indian government has approved the merger of the national carriers Air India and Indian Airlines to create an airline which it hopes will grow to rival Singapore Airlines and Thai Airways International.
The airlines will be integrated in phases over the next two years and the resulting entity will stay under the control of the government.
Indian Civil Aviation Minister Praful Patel said the new airline would be “one company with one name, one brand, one logo, and one code”.
The name and logo of the airline will be unveiled within four months. It will be one of the top 30 airlines in the world in terms of fleet size and one of the top 10 in Asia. It will launch with 112 aircraft.
“In the past decade, their [the airlines’] market position has been adversely affected due to intense competition and their inability to induct new fleet,” Patel said.
It is estimated that the decision to merge the two state airlines will result in net benefit of US$133 million after three years.
The Indian government had already approved the purchase of 68 new aircraft for Air India and 43 new aircraft for Indian.
Both airlines were created in August 1953. Air India was set up to offer international service and Indian Airlines was formed out of the merger of eight domestic airlines.
India’s Business Standard said the new combined entity would find it difficult to dominate India’s skies given the number of privately owned carriers now competing for domestic and international business.
While the combined turnover of the merged entity is more than 50 per cent of the Indian carriers’ turnover, it accounts for only 26 per cent of passengers.
