Panel says Indian Airlines-Air India merger ‘ill-conceived’

The merger of erstwhile Indian Airlines (IA) and Air India (AI) is the “root cause of all ills” plaguing the National Aviation Company of India Ltd (Nacil), the Parliamentary Committee on Public Undertakings has said.

The merger was an “ill-conceived and erroneous decision, neither arrived at by the two airlines on their own accord nor mutually considered by them to be in their best interests,” the committee stated in the report, tabled in Lok Sabha on Friday.

V Kishore Chandra S Deo, chairman of the panel, likened the merger to “a kind of marriage between two incompatible individuals having wide variances with hardly any meeting ground.”

The panel has suggested conversion of Nacil into a holding company. “Two separate wings of Nacil —- IA with its headquarters in Delhi and AI, with headquarters in Mumbai —- should be created. Each should be headed by an MD who shall report to Nacil,” the panel said.

All the losses attributable to the merger of IA and AI should be recouped by the government as the merger was a policy decision spearheaded by the aviation ministry, the panel said.

Public carriers were put to a disadvantage by allocation of prime commercial routes to private airlines, the panel said, calling for route rationalisation and route allocation. The ministry of civil aviation should conduct a transparent review of the entire route and slot allocations to ensure that Nacil is not put at any disadvantage, it said.

Utilisation of aircraft in the company is at a low of nine hours per day as against the benchmark of 16 hours per day, Deo said, making a case for increasing aircraft utilisation.

Nacil’s losses are likely to be much higher than the previous year, the panel said, outlining the need for plans, consistency and credible leadership at the helm.