AI-Indian a blip on competition radar

The merged entity will find it difficult to dominate Indian skies.

Even as the government is aiming at creating an airline behemoth to take on Asian tigers such as Singapore Airlines and Thai Airways, the merged Air-India and Indian Airlines entity will not dominate even the Indian skies.

India's private sector carriers have already become a force to reckon with and could gain in clout if allowed to fly international routes.

The total fleet of the unified entity constitutes 30 per cent of the total number of aircraft owned by Indian carriers. While the combined turnover of the merged entity is over 50 per cent of the Indian carriers' turnover, it accounts for only 26 per cent of passengers.

The combined revenue of Air India and Indian Airlines is around Rs 16,000 crore, while they flew 11.7 million passengers in the last financial year. 
 

	Air  India	Indian  Airlines	Merged entity	Share in total industry
No of Aircraft	48	74	122	30.50
Flights (daily)	35	300	335	25.75
Revenue (Rs cr)	9,677	6,000	15,677	53.00
Profit (Rs cr)	16.50	49.50	66.00	-
Parking slots*	20	20	40	25.00
Engineering services	3	2	5	62.50
Passengers (in mn)	4.7	7	11.7	26.00
New aircraft order	68	43	111	31.71
*Mumbai+Delhi

The merged entity will, however, have a larger share of airport infrastructure. The entity will control over 70 per cent of the real estate at airports (such as parking bays, hangars and maintenance slots) in Mumbai and Delhi.

According to current statistics, the entity will control 25 per cent share in parking bays at the two metro airports, Delhi and Mumbai and will also own over 60 per cent of engineering services centres in the country.

"Passengers carried are less when one compares with major airlines in South East Asia," industry analysts said.

Singapore Airlines handles over 17 million passengers with just 90 planes, while Thai Air ferries 17.9 million with 85 planes. The total fleet size of Air-India and Indian Airlines is 122.

"The merger cannot be viewed in the context of mere numbers. The actual benefit will come from the synergies followed by a cost reduction," an Air India official said.

Take an example. Air-India and Indian Airlines operate over 10 flights a day to Singapore with an average load factor of 55 to 60 per cent.

"Post-merger, this could be curtailed to 5 flights with an 85 per cent load factor. Meanwhile, the merged entity can deploy additional capacity elsewhere to increase its network," the official added.

"The carriers can also cut short their human resources at overseas and domestic airports," added a government official.