The Proposed Air India - Indian Airlines Merger*

Details

Case Code : CLBS087
Publication date : 2009
Subject : Business Strategy
Industry : -
Length : 04 Pages
Price : Rs. 100

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Key words:

Air India , Indian, Indian Airlines, National Aviation Company of India Limited, merger, Accenture, Air Deccan, Spicejet, Kingfisher Airlines, privatization

Note

* This caselet is intended for use only in class discussions.
** More comprehensive case studies are priced at Rs.200 to Rs.700 (US $5 to US $16) per copy.

 

Abstract:

This caselet discusses the proposed merger of India's national air carriers, Air India and Indian Airlines. It discusses the events that necessitated the merger, the process of the merger, the synergies expected to be gained from the proposed merger and the problems which the new company might face.

Introduction In May 2007, India's Ministry of Civil Aviation announced that Air India Limited (AI), India's national flag carrier and Indian Airlines Limited (IA), the government owned domestic airline, would merge with effect from July 15, 2007. The new airline formed by the merger was to be called 'Air India,' and would operate in both the domestic and international sectors. The proposal to merge AI and IA had been first mooted in the 1990s. In February 1999, a Parliamentary Standing Committee on Transport and Tourism had recommended the merger of AI and IA in its report on the 'Functioning of Air India'.

However, the process had formally been initiated only in September 2006, when the Indian government assigned the duty of preparing the roadmap for the merger to Accenture Inc., a management consulting, technology services and outsourcing company.

After being endorsed at various levels of the administrative hierarchy, the plan for the merger was finally approved by the Union Cabinet in March 2007.

A new company called the National Aviation Company of India Ltd. (NACIL) was incorporated on March 30, 2007 under Sections 391 and 394 of the Indian Companies Act, 1956 to facilitate the merger...