PMO queries merger of Indian, Air-India

New Delhi: The Prime Minister’s Office (PMO) has objections to the civil aviation ministry’s proposal to merge the two state-owned carriers, Indian Airlines and Air-India, into a holding company with two operating divisions.
According to a composite note prepared by the PMO the proposal in its current format is not viable because the two airlines were set up for different purposes and a merger will weaken their position in the domestic and international markets.
The finance ministry has said the carriers operate different aircraft — Indian Airlines flies Airbus and Air-India Boeing — and integrating the two fleets will result in higher costs of multiple maintenance facilities and spares.
The finance ministry maintains that Indian Airlines is required to fly to a number of loss-making destinations, which, after the merger, will hobble the airline as it competes against international airlines that have no such social obligations.
19/09/06 Bipin Chandran/Business Standard

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