Skewed priorities failing airlines' mergers: Experts

New Delhi/ Mumbai: Kingfisher Airlines’ announcement last week to discontinue with Red, its low-cost wing formed after merging with Air Deccan, raises the question on the success of mergers of aviation companies in the country.
Analysts say mergers by India’s airlines have not been successful so far because of their objectives: it’s to either kill competition or acquire flying rights to fly international.
In 2007 alone, Indian aviation saw three mergers — Kingfisher Airlines acquiring Air Deccan at Rs 550 crore and Jet Airways acquiring Air Sahara at Rs 1,450 crore besides the forced merger of national carriers Air India and Indian Airlines.
The aviation industry in India is growing at 20 per cent per annum, making it one of the largest in the world. Six major Indian carriers with around 400 aircraft catered to 143 million passengers, including 38 million international, in 2010-11. Out of the 38 million international passengers, Indian carriers flew 35 per cent of them in 2010-11.
Industry analysts say Kingfisher’s merger with Air Deccan gave the merged entity rights to fly international. Any Indian airline requires five years of domestic flying experience and a fleet of 20 aircraft to get permission to fly international. Kingfisher Airlines was only two years old in 2007, when it acquired over four-year-old Air Deccan.
If the merger of the national carriers has not been able to give expected results, it is also because the move was forced from the top and was seldom planned well or/and implemented properly.
03/10/11 Mihir Mishra & Aneesh Phadnis/Business Standard

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Categories: Indian Aviation- In General Oct 2011