Strategic, operational benefits from the merger below expectation: Jayant Sinha

Minister of State for Civil Aviation Jayant Sinha said Air India and Indian Airlines merger in 2007 did not yield the desired strategic and operational benefits as was expected.

Written by Sunny Verma | Published:May 31, 2017 5:25 am
“Niti Aayog has suggested to take steps to make it a strong and viable airline.”- Ashok Gajapathi Raju. “Strategic & operational logic that would drive a merger has been difficult to achieve.”- Jayant Sinha

Union Minister of Civil Aviation Ashok Gajapathi Raju said the government is open to all options to revive Air India including disinvestment, while Minister of State for Civil Aviation Jayant Sinha said Air India and Indian Airlines merger in 2007 did not yield the desired strategic and operational benefits as was expected. “Niti Aayog has made a recommendation for the course of action for Air India. They have suggested to take steps to make it a strong and viable airline. All courses of action are being examined by us to ensure this,” Raju said on Tuesday in response to queries  during an interaction to mark three years of the Modi government .

Finance Minister Arun Jaitley recently indicated the need to divest government’s stake in Air India given a high level of debt that the airline has. Is the aviation ministry planning divestment in Air India?

RAJU: You see Niti Aayog has made a recommendation for the course of action for Air India. They have suggested to take steps to make it a strong and viable airline. All courses of action are being examined by us to ensure this. Right now of course we can’t disclose beyond this point. We are not closed (to) any options.

SINHA: Niti Aayog has given some suggestions and we have also discussed with Air India on the strategy to turnaround the carrier and what should be the winning strategy of Air India. We are examining and analysing all options and as soon as we complete our analysis, we will unveil our decision.

Ever since the merger of Air India and Indian Airlines starting 2007 there have been questions on the efficacy of the merger and the CBI on Monday launched a preliminary enquiry into the losses that have been caused to the exchequer. Do you think the merger has done more harm than good and will the CBI enquiry affect the airline’s turnaround plans?

RAJU: Effectively nobody can put the clock back, so keep that aside, and whatever is that the enquiry is being done the reports will come and action will follow.

SINHA: I will just like to add that every time there is a merger, there is a strategic logic for a merger, there is a financial logic for a merger, there is an operational logic for a merger. So right now, of course, the investigations are underway to look into all of the financial aspects of the merger but as far as we can see the strategic and operational logic that would drive a merger has been difficult to achieve.

The government has earlier announced plans to revive and modernise 50 airports at an indicative cost of around Rs 50-100 crore each. On how many of these airports has the work started?

SINHA: Yes some of the work has started, many of the airports that are in the UDAN (Udey Desh ke Aam Nagrik scheme) right now are some of these airports that are in fact being revived. You should also know that this is a demand driven scheme and so these airports will be activated through the bidding process in UDAN, when they are activated and people ask to get these airports refurbished then we will of course put in the necessary investment to ensure that these airports are functional.

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