NEW DELHI: Indian ministers today approved a proposal to combine state-run Indian Airlines Ltd. and Air India Ltd. and create a bigger company to compete with local and overseas airlines expanding into Asia’s fourth-biggest economy.
“We want to see a big, strong national carrier, this is our intention,” Praful Patel, civil aviation minister, told reporters in New Delhi today. “We intend to complete the government process by March 31.”
The proposal will now be sent to cabinet for approval, the minister said.
The government wants to combine the airlines to compete with local carriers such as Jet Airways (India) Ltd. and overseas ones such as Deutsche Lufthansa AG in tapping rising demand in a country of more than a billion people. The merged airline will have more than 110 planes with an additional 111 on order, making it one of the top 10 in Asia by fleet.
The two companies will be merged into a new state-owned company, Patel said. The workers of both the carriers will be absorbed into this company. The merger, which will take place in phases, won’t result in job losses, Patel said.
The entire merger process will have a transition period of one-to-two years before it’s completed, Patel said after the meeting of the ministerial panel. The merger also has finance ministry approval, the minister said.