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AI, IA moving towards synergy

By Gargi Parsai

New Delhi Nov. 30. Air India and Indian Airlines are moving towards synergy with the appointment of a consultant to look into the possibility of a merger in a few years.

For the moment, the consultant, A.T. Kearney, is examining how best to come up with harmonising the operations of the two airlines as hub and spoke, as well as synergise, particularly on foreign routes. Indian Airlines operates to the Middle East and Southeast Asia and it is being examined how best foreign routes could be divided between the government-owned international airline and the domestic airline so that there was no over-lapping.

These plans would not come in the way of fleet acquisition by the two airlines. The Indian Airlines Board had approved purchase of 34 Airbus aircraft, while the Air India Board on Friday gave the nod for acquisition of 17 250-plus seater aircraft for long haul operations. A joint fleet would be able to meet competition.

Air India is unable to utilise about 35 per cent of its bilateral rights under various air services agreements because of restricted fleet. However, recently the airline has changed tack and is now going for commercial agreements with European and American airliners under the limited open skies policy of the government, which will be in effect till March 2003.

Air India has entered into a commercial tie-up with Lufthansa under the limited open skies policy for three more flights between India and Germany. It is also in talks with the Singapore Airlines for a flight to Bangalore from Singapore. It will enter into a code-share with Emirates, which is operating thrice a week to Kochi. However, Air India's negotiations with Virgin Atlantic for an additional flight to London have not taken off as the latter changed the terms of earlier agreement, sources said.

British Airways' plans to expand its services to India are also embroiled in controversy with Air India insisting on getting convenient parking slots at the Heathrow Airport in London. Air India is looking for flights to the U.S. via London. From next month the airline is launching direct services from New Delhi to New Jersey and Frankfurt.

The airline has notched up a profit of Rs. 46 crores in the first half of this year and is projecting a profit of Rs. 110 crores by March-end. Indian Airlines, however, made losses last year but is on its way to lower the losses this year. Recently, the domestic airline raised fares to partially counter rise in input costs.

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