Thaindian News

New Delhi, Jan 21 (IANS) The decision to merge flag carriers Air India and Indian Airlines in March 2007 was “taken in haste”, a parliamentary committee said Thursday.
The decision was “taken in haste, without required homework and consultations. As a result, the entire process has, in fact, been unduly delayed, if not derailed,” the Parliamentary Standing Committee on Transport, Tourism and Culture said.

“It has given rise to so many problems concerning financial, administrative and operational, which could not be foreseen by the people who took this decision,” said the committee, headed by Communist Party of India-Marxist leader Sitaram Yechury.

The government merged domestic carrier Indian Airlines and international carrier Air India three years ago, creating a single entity, the National Aviation Co India Ltd (NACIL). Before the merger, the two were separate companies.

The committee said Indian Airlines and Air India had inherent contradictions in terms of their human resource and the types of aircraft, which prevented the merged entity from attaining desired economy of scale.

While Air India’s fleet comprised Boeing aircraft, Indian Airlines primarily had Airbus jets, and engineers and the operations crew of the two carriers are not equipped to service both types of aircraft.

NACIL currently has 111 aircraft on order. These include Boeing and Airbus aircraft, of which it has already received 54 so far. While Air India (international) will get 68 Boeing aircraft, Air India (domestic) will get 43 Airbus jets.

The cash-strapped national carrier posted a loss of Rs.7,200 crore last fiscal. The airline, which has been incurring losses since 2004-05, had problems paying salaries to 31,500 employees last year.

The airline, which had approached the government for a bailout package, has been assured of an equity infusion of Rs.400 crore by this month-end.

But it has been asked to adopt cost-cutting measure and reduce costs by at least Rs.2,000 crore by the end of the current fiscal.