Decentralised structure will suit merged AI-Indian

New Delhi: The merged corporate structure of the Air India and Indian is likely to go the Lufthansa way. The merged company will have separate subsidiaries for various operational functions. This will have different arms for full-service airline, low-cost airline, maintenance, repair & overhaul (MRO), ground handling and cargo among others. The broad plans for the new company entail having separate CEOs for each subsidiary that will function as independent profit centres.
The government may merge the two low-cost subsidiaries — Alliance Air and Air India Express — of Indian and Air India respectively, into one low-cost entity.
Though the idea to adopt a decentralised business model is theoretically sound, there may still be some co-ordination problems that the new entity might have to face.
According a McKinsey Quarterly study titled A New Organisational Model for Airlines, airline companies when they grow beyond a certain limit should consider the independent business unit model, but the independence must be balanced by co-ordination.
04/01/07 Sunny Verma/Economic Times

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