Merger of AI-IA 'ill-conceived'

Separate the two under single holding company, says parliamentary panel

The committee on public undertakings [COPU] describing move “ill-conceived and whimsical”,  in its report recommended fixing of responsibility on “agencies and individuals” who took such a “whimsical” decision and sought “suitable action” to prevent such “intangible loss” being caused to the state-run company.

AI and IA were merged into a single entity under the National Aviation Company of India Limited in March, 2007. The two merged entities failed to click as a common airline because of various issues even as their losses continued to mount.

COPU chairman Kishore Chandra Deo told reporters that the move was “ill-conceived and erroneous” and added: “The root cause of the ills plaguing NACIL is the ‘merger’ which was flawed at its very inception and which never really took off.”

In its hard-hitting report, the COPU headed by Congress leader V Kishore Chandra S Deo said there was “no justifiable explanation for this abrupt haste” to merge the two carriers.

“The so-called merger is a kind of marriage between two incompatible individuals having wide variances with hardly any meeting ground,” it said.

It recommended converting NACIL into a holding company under which NACIL-Indian Airlines with its headquarters in Delhi and NACIL-Air India with headquarters in Mumbai would function.

Each of the entities should be headed by a Managing Director who would report to the Chairman of NACIL, it said, stressing that the government should “immediately” work this out.

Hitting out at the Civil Aviation Ministry, the COPU said “having imposed the merger” of the two airlines, it “has shown little initiative in monitoring the progress” and has “failed” in not ensuring continuity of leadership. Deo said the NACIL was “slipping into an abyss”.

The report said all the losses attributable to merger of IA and AI should be recouped by the Government as the decision of merger was a policy decision spearheaded by the Ministry-in-charge.

The committee observed that there is urgent need for route rationalisation and route allocation since prime commercial routes were being allocated to private airlines.
The Committee observed that utilisation of aircraft in the company is at a low of nine hours per day while the benchmark is at 16 hours per day.

Hence, NACIL should take necessary steps to increase the utilisation of aircraft. It recommended capital infusion into the ailing public airline to make the company credit-worthy for its operational credit requirements.