India's two state-run carriers will merge to create a larger airline capable of competing in an aviation market that is growing more open to private and foreign players, the aviation minister said Wednesday.
Civil Aviation Minister Praful Patel said a ministerial panel has approved the merger between Air India and Indian Airlines. Air India operates on international routes and Indian Airlines mostly focuses on travel within India and to some neighboring countries.
"We want to see a big, strong national carrier. This is our intention," Patel told reporters.
For decades, Air India and Indian Airlines thrived in a protected market until the government allowed private companies to enter the aviation business in the early 1990s.
Several private airlines have since started operations, increasingly eating into the market share of the state-run carriers. Last year, privately run Jet Airways trumped Indian Airlines, flying the highest number of passengers on domestic routes.
Air India also has suffered as the country has increasingly opened up its skies to foreign airlines, allowing them to increase the frequency of their flights to India.
The plan to merge Air India and Indian Airlines follows decisions by the two airlines to overhaul their fleets, which are currently burdened with aging aircraft.
Air India is buying 68 planes from Boeing Co. and Indian Airline has placed an order for 43 Airbus planes.
The merger process will start after the Indian Cabinet approves the plan, which is just a formality that Patel expects to come through by end of next month. It will take about two years to complete the merger, he said.
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