Saturday, February 24, 2007

Will the air travel services become better after merger of Indian and Air India?

Source: ET -InstaPoll
Reference: http://economictimes.indiatimes.com/articleshow/1653325.cms
The much awaited merger of the indigenous airlines Air India and Indian Airlines is imminent.Many are excited about this new joint venture but will it really be a success.I came across a full page article on this "The Big Story ET 24-2-07". It had discussed the pros and cons of such a deal.The upsides of this deal:
  • It will make the new merged entity the operator of the largest fleet strength, about 112 planes.The entity will enjoy the biggest parking space in any airport.AI is one of the few airlines in the world which have prime slots, refered to as Grandfather rights, by which it can find a parking in London's Heathrow airport even in the busiest of hours!!!
  • The option is economically viable too.Till now AI an IA had many routes overlapping. For instance, both airlines fly to Kuala Lumpur, Singapore, Sharjah and Dubai.With the merger, there would be no overlap in the routes.The merger would be bring convinience to the passengers too.
  • Till now AI flights did not have provisions for flights in the lesser known destinations.For example, a flight from Boston to Nagpur.AI has to pay some tax to IA for plying between Mumbai and Nagpur.So it would not be economically viable for the airlines to entertain such a passenger as margins in the aviation industry is very low.But with the merger, domestic and foreign destinations can be linked economically.
  • The merger will blend the experience and expertise of both the airlines.AI doesnot have a provision for e-booking while IA has.The sharing of the infrastructure, human resources will lead to a lot of savings.The AI building which has offices of both the airlines will have a lot of free space now, which can be rented to have additional revenues!!!!
  • For the merging entity, it wont have to worry about competition from the private airlines as would take a good 5-6 years for them to have such a capacity and attain such parking slots in major airports!!

Well these have been the positives, now the ugly side:

  • As we all know AI and IA have been typical PSUs with lazy government officials.Many employees have been serving the airlines for atleast a decade even the airhostesses!!!!So the merger might lead to a stalemate.The employees might not be able to cope with the new management.The promotion policies are different in both the airlines.So two employees who have served their respective airlines for same time period and have same set of skills might not be in the same position in the merger which might lead to anxiety among the workers.
  • As is said with great powers comes great responsibility.Till now the AI and IA have had the work force which has not been competent enough.I came across a shocking fact that one official posted abroad was just a matrick pass.He had reached that level just because he hung to the airlines!!So a new work force would be required to survive in this competitive world!This might be a good new for private airlines as this would buy them some time to expand their infrastructure while the AI-IA is busy hunting for new employees!!!
  • The planes of both airlines are different.AI is predominantly Boeing, while IA is all Air Bus. The merged AI-IA would have both these types of planes in its fleets which would increase the maintainance costs.A single type of plane is always convinient than a variety.
  • Till now both AI and IA have had all its operations manual!!Infact the most highfy gadget they possess is the plane itself!!!All the records are kept manual.One can only imagine what would happen if a merged entity would be handled manually!!So the entities have to be overhauled!!

Well I hope I can find a good critic for the above comments.Pls be free to post your comments and even add to the above discussion.

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