Ensure employees interest says eGOM

NEW DELHI: The empowered Group of Ministers (eGOM) on merger of state-owned carriers Air-India and Indian has asked the civil aviation ministry to hold talks with employees of the two airlines before finalising the merger. ���The eGOM has decided to take up the issue of integration of employees in a cautious manner to avoid any unwanted situation and to ensure that their interest were protected,��� civil aviation minister Praful Patel told reporters here. The eGOM approved the CoS proposal to provide corporate tax breaks and stamp duty waiver for the merger.

Mr Patel said that he will hold talks with representatives of the employees union of both the airlines and take their views to be put forward for consideration in the next meeting of the ministerial group. Air-India (A-I) and Indian together have an estimated combined employee strength of 33,000, Mr Patel said.

Meanwhile, the Left is of the view that the government cannot go ahead with the merger without taking the employees��� unions on board. ���The move will have serious repercussions on the employees. They have different service conditions in Air-India and Indian Airlines. This has to be taken into consideration before going ahead,��� CPM politburo member Sitaram Yechury said.

The eGOM has also approved the recommendations of the Committee of Secretaries (CoS) for giving tax exemptions and stamp duty waiver to the merged entity. Mr Patel said the eGOM has approved the CoS proposal on taxation and stamp duty for the merger which could be achieved by amending section 72(A) of the IT Act. ���The stamp duty incidence is calculated to be around Rs 50 crore, with the highest in Maharashtra where Air-India has the biggest asset,��� he said.

While the one-time cost of merger would be around Rs 150 crore to Rs.200 crore, it would result in benefit of about Rs 800 crore with and the cumulative annual benefit pegged at Rs 500 crore. The eGoM, headed by external affairs minister Pranab Mukherjee, is expected to hold another meeting within fortnight to give its final approval to the proposed merger of the two state-owned carriers.

The merged entity will adopt a decentralised model where the new company will float separate subsidiaries for various operational functions of the airline company. This will include different subsidiaries for full service airline, low-cost airline, maintenance, repair & overhaul (MRO), ground handling and cargo among others.
���Low cost subsidiaries of the two state owned carriers will also be merged into a single entity,��� Mr Patel said.

The two national carriers are expected to be merged into a new company that would be comparable to global majors such as Singapore Airlines and Emirates in size.