On the margins of delicate negotiations involving Air Sahara’s merger with Jet Airways, the Civil Aviation Ministry today got the go-ahead from Prime Minister Manmohan Singh to prepare a detailed plan for merger of Indian Airlines and Air India that can be brought before the Cabinet in two months.

In a select presentation to the PM today, Civil Aviation Minister Praful Patel listed three possibilities—synergy, holding company and merger—while backing the last option. Deputy Chairman of Planning Commission Montek Singh Ahluwalia, Air India CMD V Thulasidas and Indian Airlines CMD V P Trivedi were present at the meeting.

A merged national carrier, the PM was told, will break into the top 25 airlines of the world and would be ranked eighth in Asia-Pacific. With all the planned acquisitions taken into account, the merged airline will have a fleet of 150 aircraft that will put it way ahead of what Jet Airways aspires through its proposed acquisition of Air Sahara. In fact, the calculation is that it may even grow bigger than Singapore Airlines and Emirates.

The merger is a key element of the civil aviation policy and it is felt that this will be the best strategy to counter growing competition in the sector. The PM was briefed that synergising operations has not worked effectively between the two airlines and a holding company will create more complications in the long run.

To ensure there is greater consensus on the issue, Ahluwalia was specially called to the meeting. Sources said there is broad-based support to the idea with manpower integration being the only difficult issue.

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