Panel okay for airline merger norms

New Delhi, March 30 | Updated: Mar 31 2006, 05:30am hrs
In a move that will pave the way for smooth mergers and acquisitions (M&As) in the civil aviation sector, a high-level official committee on Thursday finalised the guidelines for the same. Apart from clearing 100% transfer of all assets of one company to the other, the norms also allow transfer of parking bays and slots, official sources said. They, however, stipulated that these rights cannot be further transferred or leased to a third party.

The guidelines will now be sent to the civil aviation ministry for approval. This is likely to happen next week once the civil aviation minister Praful Patel, currently in London, gives his go-ahead.

Still to be approved, the move is being widely interpreted as a step aimed at doing away with a major obstacle in Jet Airways' proposed takeover of Air Sahara. No formal clearance has been given by the DGCA to the Jet-Sahara merger.

FE had, however, earlier reported that the DGCA had already cleared Jet Airways' proposal to take over Air Sahara's aircraft. The new guidelines would also enable the proposed merger of national carriers, Air-India and Indian. According to analysts, such a merger would help the national carriers measure up not only for any domestic competition from the Jet-Sahara deal, but also from international carriers, especially from large airlines like Singapore Airlines, British Airways, Malaysian Airlines and Emirates.

Allowance of 100% transfer of all assets of one company to the other
Transfer of parking bays and slots
Skids put on their further transfer to a third party
Would also enable the proposed merger of Air-India, Indian
Guidelines, with the ministry's approval, will be the first of its kind for the sector
According to official sources, the Aircraft Acquisition Committee comprising representatives of the civil aviation ministry, the Directorate General of Civil Aviation and Airports Authority of India has cleared 100% transfer of properties, including infrastructure relating to parking bays and slots.

Mr Patel had earlier indicated that the civil aviation ministry would issue guidelines on M&As in the wake of the impending clearances to the Jet-Sahara deal. The guidelines, if approved, will be the first of its kind for the sector which is currently in the midst of unprecedented growth.