Air India – Indian Airlines divorce

NEW DELHI: If you can’t fix it, merge it. And if you still can’t fix it, demerge it. This seems to the government’s prescription for Air India
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and Indian Airlines which were merged in August 2007 despite widespread criticism. Interestingly, the merger has actually not moved much beyond a common billboard and a holding company.

With a rehab plan for Air India proving to be a fraught task, a proposal to undo the decision to forge Air India and Indian Airlines into a single entity has been mooted by the finance ministry. The ministry, which has to foot the bill for any revival package, is understood to be increasingly nervous over the viability of bailout plans for the floundering carrier.

Sources said the proposal has been placed by the expenditure secretary in the finance ministry before the E-GoM on Air India and other ministries are to get back with their comments on February 3 when the group meets again. PMO is understood to agree that the merger has been largely on paper but feels that demerger should be “thought through” just as the merger was not.

The merger was mooted and carried through by civil aviation minister Praful Patel. Asked what he now thought of the demerger move, the minister clearly indicated his disagreement, if not disbelief. “Aisa kuch nahin hai (there is nothing like this),” he told TOI when reached on phone in London. However, sources in the ministry admitted that the domestic and international operations of Air India would continue to function as separate units.

http://timesofindia.indiatimes.com/biz/india-business/Finance-ministry-moves-for-AI-IA-demerger/articleshow/5502764.cms