Air Transport

India’s prime minister has given in-principle approval for a merger between Air India and Indian Airlines and the civil aviation ministry hopes the proposed deal can be completed by year-end, writes Leithen Francis.

Prime minister Manmohan Singh and civil aviation minister Praful Patel believe the two wholly state-owned carriers would be “better off as a merged entity”, says a spokeswoman in New Delhi for the civil aviation minister.

She says Patel made a presentation to the prime minister late last month in which he put forward four proposals, one of which called for a full merger, while another suggested “synergising them so the two airlines would remain separate, but would co-operate and help one another”.

The spokeswoman says the prime minister concluded there was “more benefit in merging them” and gave “in-principle approval to go ahead with the merger”.

Merging the two carriers means the united entity “will be one of the biggest airlines in the world”, says the spokeswoman. “Air India is ordering 68 Boeing aircraft and Indian Airlines is ordering 43 Airbus aircraft.”