September 16, 2008
IA, AI to Use Two Codes Till April
By Saurabh Sinha
NEW DELHI: The Kingfisher-Deccan combine may have started operating flights on a common code named IT, but Air India and Indian Airlines that integrated last August may continue using two codes, AI and IA, at least for two more quarters. The merged airline, National Aviation Company of India Ltd (Nacil), has realized that the passenger booking systems of the two airlines can't be merged."We are now switching over to a brand new, state-of-the-art passenger reservation system that will allow us to operate all flights on the common AI code by next April. The vendor for this has been selected and work has started," Nacil CMD Raghu Menon said.
One reason for the quick transition in Kingfisher-Deccan was that the latter was not on global distribution system while both IA and AI are on GDS. Further, the government's approval for this transition came only a few months back.
There have been serious doubts that the merger of IA and AI is only in name and this impression is only strengthened by the continuance of IC and AI codes a year after the merger. Menon, however, tried to allay apprehensions over the merger process, saying that HR issues had been more or less sorted out and that synergy benefits were much more than expected.
"Fears on HR integration front have been belied. The synergy benefits out of merger have been impressive. In the first year of merger from last to this August, a benefit of Rs 150 crore was expected. But the actual synergy benefit has been to the tune of Rs 600 crore. From August 08-09, we now expect a benefit of Rs 1,200- 1,300 crore," he said.
The big saving has been better discounts on account of combined volume purchases for both the airlines together. For instance, volume discount on fuel purchase has been about Rs 250 crore. Then there have been better discounts on insurance premium, network synergy and other procurements.
But then why this benefit not help the company that lost Rs 2,144 crore last fiscal and could lose more than double that amount this time? "Had it not been for these benefits, the situation could have been different. And I don't believe the doomsday loss figures for this fiscal. The reality is that fuel has hurt every airline a lot. Our budget from 2008-09 had expected a fuel bill of Rs 6,500 crore but the five constant hikes in jet fuel prices from April to August has led to an additional burden of a stupendous Rs 1,500 crore for this period," Menon said.
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