Even if you doubt how genuine this is, most of the clues seem to be coming from the way the AI and IA chiefs talk.

The AI chief is "supposed to have got an extension" becuase he talked about a merger.

And IA chief Dr. Vishwapathi Trivedi is suddenly and aggressively talking of IA's new identity.   

Another clue is the way the IA website is being developed. It is a clear attempt to establish the new IA identity. Hardly the thing to be done if a merger is to happen. In a merger you blend. Not break away and still be talking about your new identity and future plans!!!   

Same report again

Air-India, Indian to merge soon, says AI MD

The Hindu

June 9, 2006

Staff Reporter

THIRUVANANTHAPURAM: Chairman and Managing Director of Air-India V. Thulasidas has said that Air-India and Indian (formerly Indian Airlines) will soon be merged and made a single airline.

He has said that Union Minister of State for Civil Aviation Praful Patel has set a one-year timeframe for completing the proposed merger.

Mr. Thulasidas was inaugurating the renovated Air-India booking office in Thiruvananthapuram on Thursday.

He said that after the merger, the new airline would become the largest one in Asia. Consultants for the purpose would be appointed soon. Even after the merger, the new airline would continue to operate budget services such as Air India Express.

He said that Air-India had always maintained cordial relations with Kerala and as soon as the Kerala Government allotted it 6 hectares of land, Air-India would start work on the proposed engineering base in Thiruvananthapuram. It was the first engineering base for Air-India outside Mumbai, Mr. Thulasidas said.

AI making profit

Air-India, he said, had been making profit for the last four years. Air India Express was also making profit. Air-India purchased 68 new aircraft valued at Rs.35,000 crores and Indian Airlines bought 43 new aircraft, he added.

Air-India Commercial Manager (Kerala) K. M. Kurian and Air India Thiruvananthapuram Manager H. A. Munaff were among those who attended the inaugural function.

AI chairman V Thulasidas is on the threshold of making history. Besides helping AI earn a profit since he has been at its helm, he would oversee a path-breaking merger with Indian. The merger has to be completed by March 2007 and it would make the new entity the biggest airline in Asia.

In an exclusive interview with journalist Sanjiv Kapoor in New Delhi, Thulasidas shared the philosophy behind the speedy merger.

What is the real compulsion to have a merger in this crisis year?

We found that today the two airlines Air India (AI) and Indian Airlines (IA) are performing almost a similar role. There was a time when IA was the only one to fly domestic routes. AI was always in competition with foreign airlines. So these two airlines had clearly demarcated regions and at that point of time and there was no need of merger. With the opening up of the civil aviation sector, IA is now free to go anywhere in the world. AI similarly is free to fly within India. Two airlines owned by the same owner are doing exactly the same thing and the company is paying a price for that. They are damaging each other in the process of competition.

Why are they damaging you as the private players are also doing the same thing?

No, if the two airlines have the same owner then these two airlines should compete against other private airlines rather than amongst themselves. But there is much bigger competition in the huge international airlines market. The competition from these airlines is much greater because AI faces it day in and day out. The local private airlines and large international airlines market has become so huge that unless you have the latest in terms of technology, networks and the clout to face the competition you won’t survive. We are small airlines and we have 40 odd aircraft, which is nothing compared to other players in the international aviation sector. There are 500 plus aircraft airlines. We are going to become an airline of 125-150 aircraft, which is going to make us one of the biggest airlines in Asia. China has more aircraft because there are four airlines and all of them form a huge fleet.  Similarly, if we also include Jet Airways and other private carriers we become a big unit. The difference is that China is expanding and they order their aircraft in a combined fashion. A lot of airlines who work separately come together and buy their aircraft together, unlike in India. When they buy Boeing aircraft, an entire Chinese team led by the president and prime minister go to Washington to sign the deal. What we need is a larger fleet so that we can negotiate with manufacturers, hotels and suppliers. So these couple of factors provide the logic for this merger. Ministry has already come to AI asking us to engage a consultant on behalf of both airlines. The consultant needs to propose a roadmap for the merger.

So when are you going to advertise?
We have issued advertisements and are waiting for the proposals.

Did you anticipate any kind of employee unrest due to merger in IA and AI?
The indications are that employees of both airlines find merger to be as inevitable and essential as the government itself. We have had discussion with employees in AI but it was an informal discussions. Whoever I spoke to about merger agreed and said that it is required. We are at discussions with the senior management in AI and everyone said that inevitably we have to have a merger.

The most logical consequence of merger is that people are going to be off loaded.
The government has made very clear there will be no loss of employment and no loss of job.

Employees do not benefit by merger. Do they?
Employees will benefit ultimately because they will be part of much larger entity or much larger organisation. The main motive is to see that at the end of the day employees are there to see if the passengers gain. Ultimately the passengers have to gain and in this case the country has to gain. The national carrier of India to some extent should reflect the mind, strength and power of India. We need many airlines but we must have a national carrier which can truly reflect India.

What about short haul routes for AI?
That is the problem that AI and IA have to sit down and talk about it. After the merger, the consideration would be different and not which airline flies which route. Small aircraft would fly on small routes and bigger aircraft fly bigger routes.

I will give you an example of how we can gain something. Suppose four IA fly to Singapore and AI flies another four so eight flights between India and Singapore. Mostly, what happens is that their load is generally low as we are competing against each other. After merger, we don’t need eight flights and we can rationalise it to six that can carry a greater load and thus save on everything.

Do you think that this merger has also been done primarily because of the merger of Jet Sahara airlines?
Why talk only about the Jet Sahara merger? Merger and consolidation has been happening in the aviation sector for a very good reason. Lufthansa and Swiss Air have come together. Some two or three airlines in US have come together. So consolidation of merger is happening in the aviation sector because this is a business of very high costs and limited margins. There are airlines in the world that are actually losing money, especially in the US. Airlines need to just stay afloat as there is no real profit there. So in these high cost regime it makes sense to save resources, merge and consolidate.

What happens to AI Express?

Now that is something we have to decide. If you merge mainstream single airlines then we have to decide what we should do with a subsidiary airline like AI express. Indian has Alliance Air as its subsidiary. When we become one merged airline we can think of a subsidiary airline too. Perhaps, the subsidiary airline can operate internationally and domestically as a low cost airline. The main airlines can operate as a regular premium airline. That could be one way. We are also contemplating having subsidiaries for ground handling, maintenance.

The lease of three 747 lease has expired. How will you handle this short term shortage till 2007?  Aircraft these days are not easily available
Those three aircrafts have finished their lease and they have to go back. We have issued a tender and we have received some proposals. I don’t know about the details and we are on the lookout for three aircraft and of course the leasing market is very tight.

You had a wage revision in April?
We did it for certain categories of employees, not for all. Wage revision in a public sector undertaking is done when the company has been earning profits for the past few years. That is the guideline of the government AI has been earning profits for the last five years.

After IA's new widebody search -- and they want the 12 planes for at least 7 years -- am beginning to doubt whether there is going to be a merger.

http://www.thehindubusinessline.com/2006/06/15/stories/2006061503730900.htm

AI may pick consultant for merger tomorrow

Our Bureau

New Delhi , June 14

In a move that is likely to give a fillip to the proposed merger of Air India and Indian Airlines, a sub-committee of the Air India board is scheduled to select a consultant on Friday who would draw up a road map for the merger of the two state-owned carriers.

The sub-committee includes not only the Chairman and Managing Director but also the Director Finance of the two airlines.

In addition, the Chairman of ICICI Bank, Mr N. Vaghal, is also a part of the sub-committee.

The airline, which was mandated by the Ministry of Civil Aviation to seek applications from reputed merchant bankers, financial institutions and management consultancy firms for appointment of a consultant to advise on the merger, is to choose from the seven bids it had received.

"The sub-committee is likely to shortlist a consultant on Friday and the work for creating a road map for one mega airline should be ready within the next three months," official sources said.

Official tight-lipped

While officials were tight-lipped on how the merger would proceed, sources indicated that the current thinking in the Government was to complete the process through a "clean merger" rather than follow the model of having a holding company that could eventually facilitate the merger of the two airlines.

However, a final view on the way forward would emerge only after the consultant's recommendations have been approved by the Government.

The Minister for Civil Aviation, Mr Praful Patel, has already said the merger would be completed by March 31 next year.

The Ministry has also made a presentation before the Prime Minister, Dr Manmohan Singh, who is said to have given his approval for the merger to go ahead.

Aseem wrote:

---

karatecatman wrote: After IA's new widebody search -- and they want the 12 planes for at least 7 years -- am beginning to doubt whether there is going to be a merger.       merger can still be possible, after all the AI's new wide-bodies are not going to fill all the demand.  Moreover, why wait for tomorrow if you can do something today. my VT-ASJ

---

the merger issue becomes more and more complicated day by day on Zee News an IC spokesperson said "IA capable of handling international all by itself it does not need codeshares"

now what to say on this

AI's chief's latest interview. Flip-flop again.    
   
http://www.financialexpress.com/fe_full_story.php?content_id=130988 
THE MONDAY INTERVIEW : V THULASIDAS
 
‘Airlines can’t compete today without a critical mass and clout’ 
 
Posted online: Monday, June 19, 2006 at 0000 hours IST
 
       
 
 
 
 The merger of the two state-owned carriers, Air-India (A-I) and India Airlines (IA), is finally on the cards. But will the merged entity be able to deliver in the face of intensifying competition in the airline industry today? V Thulasidas, chairman and managing director, Air-India believes the combined entity will have the clout and the size and will offer the quality of service required to stand up to competition as he told MG Arun and Sagar Malviya. Excerpts:

Talk of a merger between A-I and IA has been on for long, but now the government seems to have finally decided on it. What is the logic behind the merger?

The idea to merge the two airlines has been around for a long time. However, there is a marked change in the environment now. Earlier, both Air-India and Indian Airlines had separate, clearly defined roles. Over the years, competition in the industry has intensified in quantitative and qualitative terms. Without a certain critical mass and clout, it is impossible for airlines today to face competition and to retain their positions in the market. Another aspect is that today, IA is increasingly becoming an international carrier, and with a liberalised policy, can fly to the US, Europe and other countries. At the same time, A-I is getting more into domestic operations. This means that both the carriers are now doing the same things and our roles are getting mixed up.

How will the merger help you compete with other airlines in such a dynamic, competitive environment?
At this moment, IA and A-I are competing against each other. But with the merger, we can pool our resources, avoid duplication, rationalise costs, save a lot of money in terms of aircraft resources, manpower, office space and so on. We can then devote ourselves to flying new routes and beefing up our flights. After the merger, we would rationalise our timings and would also reduce the number of flights to the same destinations.

What are the integration issues you foresee in this merger?

When two large companies come together, there will be a number of issues, particularly people issues. But these are not insurmountable. Also, in the merged entity, none of the employees of the two companies would lose their jobs. The merger will create the size, but public perception regarding these airlines cannot be changed overnight.

What are your plans for an image makeover?

I am aware that there are shortcomings in both the airlines and they need to get over these, independently. We are planning to take a few steps to improve our image. The national carrier of India earlier had a small fleet which did not reflect its clout and size. The fleet for which we have placed orders recently will have all the latest amenities for the comfort of passengers, comparable to those of internatio-nal carriers.

We have appointed a brand consultant to rediscover the brand. The model being followed is the A-I of the past, the airline which used to be the best in the world. The re-branding exercise would reiterate the Indian roots of the airline and would emphasise on three aspects—warmth, hospitality and tradition.

We are also planning to introduce a change management programme at all levels in the organisation to prepare ourselves for new challenges, new aircraft and new services. We are in the process of appointing consultants for this. Our employees will be trained on how to do their jobs better and be an integral part of the A-I team, absorbing these changes in a better way. Beyond training, there will be changes in terms of structure and operations to make them more efficient. Decisions will have to be taken keeping two airlines in mind, and not just one.

Why are A-I cargo operations showing stagnant growth and a dismal 10-12% share in the last few years?

As an airline, we need to improve our cargo operations. We had decided to improve it as part of our growth plan in 2004, when I joined the airline. Unfortunately, we could not do it since we did not have enough aircraft. At present, we have no dedicated freight carriers. We only have three combis which are used for lifting both cargo and passengers.

We have decided to convert two to four A 310 aircraft into full-fledged cargo freight carriers. India has an open skies policy for air cargo. Any airline in the world is free to come to India. This is good for other airlines but not for A-I, since we do not have the wherewithal. Now, with 68 aircraft being ordered, we will also have more belly space for lifting cargo.

The rising cost of aviation fuel must be a disturbing factor for you...

It is extremely difficult for airlines to manage finances in an environment where fuel prices are rising. This is not peculiar to India or A-I alone. It is an issue shared by all the airlines in the world. European carriers, by Iata’s own admission, have not been making money. Asian carriers are just about making small margins. If ATF prices continue to rise, even Asian carriers will start losing money.

Do you plan to be a part of any airline alliance?

We believe now that we should be part of an alliance. It can do us a lot of good in terms of better load and will enhance our network. I think that by 2007, A-I should be part of an alliance.
 
 

Thats not a good idea bith have to pay amounts which they cannot.

I feel AI is a part of something like "Zed" i dunno the name exactly.