Bangalore : A committee of ministers will hold a crucial meeting on Monday to decide on a merger of India’s two state-owned airlines, Air-India and Indian, and to assess what impact a merger would have on the carriers’ 33,740 employees.
The merger of Air-India and Indian will create an airline with a fleet size amongst the 20 biggest in the world. The committee has approved the merger “in principle”, but postponed a final decision until Praful Patel, the Union civil aviation minister, meets representatives of the employees.
But the biggest worker union at Indian, the domestic airline, said issues related to seniority and job security remained key hurdles before the merger. Workers at Indian are still concerned that after the merger, they will find themselves being supervised by younger and less-experienced employees, said J.K. Badola, general secretary of the 14,000-member Air Corporation Employees Union.
In addition, said Badola, the union had yet to receive a written guarantee that their wages would be hiked to match those at Air-India, or that their jobs would not be eliminated. Indian’s employees currently get paid as much as 15% less than their comparable Air-India counterparts.
“I don’t see why they are in such a big hurry to carry this through,” he said.
Air-India and Indian are considered over-staffed by global standards. Together, they have about 300 employees per aircraft, compared with about 120 at American Airlines and 180 at British Airways.
Unions from both Air-India and Indian met defence minister Pranab Mukherjee, who heads the empowered group of ministers studying the merger, and were assured that their concerns would be discussed at Monday’s meeting.
Last week, a government official said wages at Indian would be hiked with “no discernible difference” with Air-India salaries. But that decision can cost the merged airline nearly Rs133 crore a year, based on 2005 figures, which will effectively wipe out most of its profits.
In addition, the airlines have together ordered about 111 new planes from Boeing and Airbus, adding about Rs15,000 crore in debt that will have to be paid off in about 12 years.
Badola said the unions were concerned about the debt because pressure from interest costs on the bottom line might result in layoffs. “We have asked for a debt study, but it’s not clear if that will happen,” he said.