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Nacil on tough runway in merger mode

The merger of Air India and Indian Airlines that created a new entity now known as NACIL, is poised to ‘truly take-off’ by mid-2008, reports Samiran Saha.

business Updated: Jan 03, 2008 00:32 IST
Samiran Saha
Samiran Saha
Hindustan Times

The merger of Air India and Indian Airlines that created a new entity now known as the National Aviation Company of India Limited (NACIL) is poised to ‘truly take-off’ by mid-2008.

However, for the public sector giant that is grappling with competition from new and aggressive entrants in the aviation sector it is likely to be a daunting task ahead. Experts feel that employees of the merged entity would determine the future of the airline.

“We are very comfortable with competition. Air-India will soon be part of a global aviation alliance by the time the merger process is complete and it will give us an edge over our competitors,” Air India’s executive director corporate communication Jitendra Bhargava said. The process of integrating the airlines, staff and route rationalisation would take about a year and mark the completion of the merger process.

The airline has adopted a top-down approach and the process of integrating staff from both the airlines has been initiated from the executive director level. “The process for integration of manpower is being carried out by six teams, including consultants and representatives of both airlines who are working on the process. The six strategic business units are in place,” Bhargava said.

“Harmonisation of pay at various levels is being worked out by and we are starting a top- down approach. Integration is being carried out at various levels. Soon, the airline would have one balance sheet, one management. Synergy between the two airlines will definitely a big advantage,” a senior Air India official added.

Aviation sector expert and chief executive officer of the Center for Asia Pacific Aviation Kapil Kaul feels that the critical element in the entire merger process is the completion of the process in the given timeframe of 18 months.

“What Air-India needs is a stable leadership, enhance its scope of corporate governance and to be a board run company, with sound leadership and management will help it become a truly global airline with a very large domestic and global foot print,” Kaul said.

“The market will not fail the airline. It is the employees and the government that will make this airline successful. However, it has to acheieve a quick financial turnaround and should deliver to make a place for itself in a highly competitive aviation market,” he added.

“The airline has hardware by way of new fleet, that is just 50 per cent of the entire issue. The bigger challenge is to have a smooth integration of the staff and human resource issues, which are normally underestimated,” he said.

The airline, Bhargava said would review its fleet expansion plan in 2008 when the physical merger of the both the entities will be completed. “This will also be around the time when we would finalise our joining the global alliance.”

The government cleared the merger of the two airlines in March last year. With integration of staff, the airline would have around 32,000 employees and over 120 aircraft making it one of the biggest airlines in Asia.