“We are damaging each other in competition.”

Air India  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, Thulasidas shared with Hardnews the philosophy behind the speedy merger

Sanjay Kapoor Delhi

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 (Formerly known as Indian Airlines) are performing almost a similar role. There was a time when Indian 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.

How is competition between the two airlines damaging? Aren't the private players also doing the same

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 and  AI is facing it on a daily basis. 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. We are a small airline having only 40 aircraft, which is nothing compared to other players in the international aviation sector. There are airlines with 500 plus aircraft. Soon 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 the prime minister goes to Washington to sign the deal. What we need is a larger fleet so that we can negotiate better with manufacturers, hotels and suppliers. All these factors provide the logic for this merger. The ministry has already asked AI to engage a consultant on behalf of both the 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 of Indian and AI?

The indications are that employees of both airlines find merger to be as inevitable and essential as the government itself. We have talked with employees in AI but it was an informal discussions. We also discussed this issue with the senior management in AI and everyone was agreed to the idea of a merger.

The most logical consequence of merger is that emplyoees get off loaded.