India's Central Bureau of Investigation (CBI) has launched a preliminary enquiry into the merger of Air India (AI, Delhi International) and Indian Airlines (Delhi International) in 2007, reports The Economic Times. It follows other investigations into Air India's acquisition of 111 aircraft between 2004 and 2008, and another into the loss of lucrative routes.
The merger of the two airlines was approved by the Indian government in 2007 under the auspices of then civil aviation minister Praful Patel, and came into effect of August that year. Instead of the predicted profits, the new business suffered losses immediately and, in the turmoil that followed, it lost important ground to emerging private carriers such as IndiGo Airlines (6E, Delhi International) and SpiceJet (SG, Delhi International).
Speaking with The Economic Times, Air India Chairman, Ashwani Lohani, said that the merger had been a major contributor to the subsequent failure of Air India.
"The merger resulted in massive discontent and frustration among the staff," Lohani said. "The subsequent demerger of ground handling and engineering companies added to the problems. In hindsight, it appears that a no-merger scenario may have been preferable."
Also being investigated is the acquisition of 111 aircraft at a cost of INR700 billion (USD10.2 billion). This includes the controversial purchase by Air India of sixty-eight Boeing (BOE, Washington National) aircraft in 2005, a dramatic increase on the original order for twenty-eight aircraft, at a time when the carrier could ill afford it.
The final matter up for investigation is the loss of profit-making routes, which has been filed against civil aviation ministry officials. According to the probe, bilateral routes were given to private carriers to the detriment of the national carrier.
