Air India, Indian Airlines Merger Approved

India gave final approval Thursday to an Air India and Indian Airlines merger, paving the way for the creation of South Asia’s largest airline.

The merger is expected to take effect in August and take two years to fully implement, Information and Broadcasting Minister Priya Ranjan Dasmunsi said.

The cost of integrating the two airlines is estimated at $45 million, but the synergies created by the third year are expected to be worth more than $186 million, improving initial profitability 4 percent, the Press Trust of India reported.

Both international carrier Air India and domestic-focused Indian Airlines have aging fleets compared with those of major rivals.

The combined carrier will be among the top 30 airlines in the world.