Yechuri panel report slams Air India-Indian Airlines merger plan

A parliamentary committee set up to go into issue of the merger of national carriers Air India and Indian Airlines and its impact on the domestic aviation sector has said that decision was taken in a hurry.

The Parliamentary Standing Committee on Transport, Tourism and Culture headed by CPI (M) leader Sitaram Yechury said in its report today that the decision to merge the two national carriers was taken in haste, without required consultation and homework.

The union cabinet had given its nod for the merger of the two national carriers on 1 March 2007 after an empowered group of ministers headed by Pranab Mukherjee cleared the proposal. (See: New company to be formed with Air India, Indian Airlines merger)

The report said that by merging the two national airlines in haste, "it has given rise to many problems concerning financial administrative and operational."

The report goes on to say: "Two major objectives of merger 'economies of scale' and  'increased leverage' couldn't be achieved without proper synergies. The Air India fleet consists of Boeing aircrafts being normally used for long distance international destinations while the Indian Airlines fleet consists of Airbus aircrafts, which are used for the domestic destinations. Operational crews, engineers and technicians cannot be cross utilised on another."

Air India's fleet consists of US-made Boeing aircraft, while a majority of Indian Airlines fleet is made up of France-based Airbus jets. The merger created problems since pilots, engineers and operating crew of the two carriers were not technically equipped to fly, operate and service the different types of aircraft.