'Ai- Ia Merger Key To Global Pacts'

Aviation experts and an international airline's top executive have said that unless Indian Airlines and Air India are merged together and are freed of government control, they may find themselves isolated from emerging global alliances.

"They will end up becoming regional players," an international airline's top executive told Business Standard. Aviation experts who had assembled here at the launch of a five-star alliance consisting of Lufthansa, United Airlines, SAS, Air Canada and Thai Airways, predicted that only half-a-dozen airlines will remain in the sector in another decade.

Other players will either form similar alliances or will be reduced to catering to niche or regional markets. Hence, if Indian national carriers were to compete in the world market, they should be fully privatised and merged together for better synergy, aviation experts said.

 

If both the airlines merge together, their combined fleet strength will be around 78. And with both the airlines planning fresh acquisition of planes before the turn of the century, the total fleet strength will cross 100. Apart from widening route network, a consolidated airline will lead to huge cost savings and better synergy between the two airlines.

According to one of the top officials of Lufthansa, merger alone will not lead to substantial gain. "Privatisation is equally important as professional managers will then have a free hand to make the product more competitive," he said.

During the launch, German transport minister Matthias WissmannsaidLufthansa will be fully privatised before the year-end. He pointed out that only privatisation of state functions in a deregulated environment, can make any enterprise stand up to the pressures of competition.

Outlining the parameters for any airline to join the alliance, chairman of one of the airlines, said product should match international standards and it should be able to maintain the trust reposed by other alliance partners. "Lax standards, pandering to whims and fancies of state machinery, will certainly not help its cause," he said.

Airlines need not necessarily be big to endear themselves to alliance partners but they must be extremely efficient and competitive, the chairman said.

Recently, the government unveiled a new code-sharing norm for Indian Airlines and Air India and it was seen as one step closer to merger. However, one of the airlines apparently has reservations about the new norms and has protested to the Government that it might lose out in the bargain. As per the norms, both the airlines will carry each other's flight numbers and both of them will offer each other the most attractive fare and schedules of both of them will be coordinated to ensure maximum efficiency and sales generated by operating airline shall be counted towards sale performance by the non-operating partner.

With both the airlines suspicious of each other's intentions, industry analysts in the country say it is unlikely merger between IA and AI will take place in the near future and hence may get isolated from future alliances.