New Delhi: The Group of Ministers (GoM), a committee of the Government of India's cabinet, on Wednesday endorsed the civil aviation ministry's proposal to merge the two State-run carriers - Air-India and Indian, civil aviation minister Praful Patel said.

According to the minister, the issue will now go to the Union cabinet. He also said that the Government intended to complete the decision making process by March 31.

Patel cautioned that the merger would not be an overnight affair, as the transition period envisaged a spread of 18-24 months. He mentioned that the finance ministry had broadly endorsed the issues relating to stamp duty, registration and taxes.

The prime minister, Dr Manmohan Singh, had constituted the GoM to look into the merger of Indian and Air India, last year in October. The nine-member GoM included the ministers for defence, finance, company affairs, civil aviation, public enterprise and personnel apart from the deputy chairman of the planning commission.

The Governments move to merge the two State-owned carriers had come even as the market share of both had shown constant slippage over the last year or so.

Making the announcement, Patel also sought to allay fears of employees about job security and other related issues, saying that the employees could be rest assured that their employment conditions would remain unaffected.

Air Indian?
The merger will create an airline that will have over 125 new-generation aircraft by 2010. Its fleet size would also see the merged entity break into the top 30 airlines in the world, and amongst the top 10 in Asia. It will also become India's first airline with over 100 aircraft.

The merger is expected to create considerable synergy, as the two entities will now be able to feed traffic to each other. Also, with a combined turnover of over Rs15,000 crore the merged entity will gain added financial strength, with revenues and savings showing a marked growth. A host of facilities such as parking bays, booking offices and lounges would be shared and duplicate offices made redundant. Given its size, the merged entity is expected to gain an edge in material procurement, fuel purchase, insurance and catering.

It is expected to become the largest ground-handling agency in India and also to dominate the domestic freight market. Aircraft utilisation will also be up significantly.