Aborted takeoff: Why the IA-AI 'marriage' failed

In recent days, Civil Aviation Minister Ajit Singh has been giving voice, with uncharacteristic candour, to his thoughts on the folly of the merger of Indian Airlines with Air India.

“In retrospect, it appears that the merger hasn’t worked out in the way it was envisaged at that time,” Singh told Karan Thapar on CNN-IBN . “At that time, they perhaps thought there would be a lot of synergy, and there would be cost savings. Looking at it now, it definitely hasn’t worked out.”

Hindsight vision is, of course, always perfect. What was in 2007 perceived as an astute move that would bring synergies and cost savings is today being shown up to be a cross-cultural marriage that brought together two traditional families, neither of whom is ready to give up the peculiar orthodoxies of their respective culture.

More from Business

Hyundai India’s Rs 27,870 crore IPO oversubscribed by 2.28X, largely driven by institutional investors How Indian fintech startups are driving Malaysia’s UPI-like digital payments revolution

[caption id=“attachment_309982” align=“alignleft” width=“380” caption=“The two airlines’ employees were on vastly different payscales, and although they were both immersed in the ‘sarkari naukri’ culture. AFP”]  [/caption]

Which is why even if it made business sense, the merger never really took off owing to perceptions of a ‘status’ hierarchy. The two airlines’ employees were on vastly different payscales, and although they were both immersed in the ‘sarkari naukri’ culture, a pecking order was established even within themselves.

Indicatively, as former Civil Aviation Minister Rajiv Pratap Rudy points out, one of the issues over which Air India pilots have now gone on strike relates to their unwillingness to allow pilots of the erstwhile Indian Airlines be sent for training on Boeing 787 Dreamliners or even the 777s and the 747s.

Impact Shorts

More Shorts

Tata Harrier EV vs Mahindra XEV 9e: Design and road presence compared

As Trump weaponises tariff, Fed sees a bigger worry: Not jobs, but rising prices in America

It didn’t help, of course, that the union was never fully consummated. To this day, the merger is only 70 percent complete. Significantly, critical Human Resource functions, which go to the core of the problems over the ‘clash of cultures’, haven’t been merged. That is now being addressed through the instrument of the Dharmadhikari Committee report, which was submitted in late January.

That report went into critical aspects of staff restructuring, including the issues of career progression, rationalisation of pay scales and allowances. But true to form, the government has now appointed another committee to make recommendations on the operational aspects of implementing the Dharmadhikari Committee report.

So if Ajit Singh feels the merger hasn’t worked as envisaged, does he wish to turn the clock back by de-merging the two entities? Appearing on NDTV on Monday, the Minister said he did not favour such a move - since it would take another five years to operationalise.

In fact, the cross-cultural issues between the employees of Air India and Indian Airlines appear somewhat overstated in comparison to several other mergers in the airline industry in other contexts, many of which were far more challenging - because they were carried out across national geographies.

For instance, when KLM merged with Air France in 2004, among the cultural issues that cropped up was whether the language of communication would be French or Dutch. (They decided it would be neither, and opted for English.)

Even organisationally, the Air France-KLM merger was better managed with foresight: the two companies were vastly different in size and stature, but operated as separate entities, but with one holding company. Each of them retained and operated under their own brand names from their respective home bases - in Paris and Amsterdam. The KLM brand and logo was protected for five years, and Schiphol was allowed to retain its status as an international hub for eight years. ( More details here.)

In contrast, the IA-AI merger - although between two families who belong to the same governmental gothra and who had much more in common between them - comes across as a shotgun wedding, entered into without adequate application of mind or a union of hearts. Is it any wonder it is playing out on prime-time television with all the sordid elements of a saas-bahu serial…