The Hindu Business Line : `Consequences of airlines merger must be considered'

While formulating the new civil aviation policy, the Government should consider the consequences of merger of airlines including the matter regarding reallocation of infrastructure facilities at the airports, the Parliamentary Standing Committee on Transport Tourism and Culture has recommended.

"Of late there have been changes in the strategy of private airlines operators by way of consolidation of their operations. The Committee feels that these conditions can lead to monopolistic situation in the sector and there is a need to check the trend," the report that was tabled in Parliament recently adds. Earlier this year, Jet Airways acquired Air Sahara for a consideration of $500 million. The acquisition is yet to be formalised as Government clearance is still awaited. However, in a move that is likely to help not only the Jet Airways buy out of Air Sahara but also the proposed merger of Air India and Indian Airlines, the Aircraft Acquisition Committee of the Ministry of Civil Aviation has proposed allowing 100 per cent transfer of property including aircraft, routes, and parking bays, when one company buys out another.

Commenting on the decision of Air India to wet lease an Airbus A-340-330 E aircraft from Jet Airways, the Committee has expressed the opinion that the state-owned carrier could have approached other airline organisations also.

"The procedure followed by AI was against the practice of open competitive tendering process and therefore lacks transparency. The impending shortage could have been anticipated early had there been a constant assessment of the available aircraft capacity" the report states.

Other proposals

Further, the Committee has recommended that adequate contingency plans should be prepared including standing arrangements for lease of aircraft during exigencies by following the proper tendering process.

It has also recommended that adequate steps, in addition to the acquisition of aircraft, should be taken to enable Indian Airlines to tap the market opportunities in the domestic and international markets. It has recommended that the Ministry of Civil Aviation take up with the Ministry of Finance the issue of extending beyond April 1 next year the exemption on payment of tax on lease rentals of aircraft or engines payable to a non-resident foreign lessor under Section 10(15A).

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