Merger snag at Air India

In the year 2007, Government of India, ministry of civil aviation, merged the domestic airline Indian Airlines (IA) with its international operator Air India (AI). After the merger, AI, once known to be the brand Maharaja in aviation industry and a pride of the nation faced many problems like mismatch manpower planning, deteriorating industrial relations, operation in non-profitable routes, mounting debts and the rising prices of aviation turbine fuel (ATF), which led the company making continued losses over past few years. Although, the management had from time to time planned renewed strategies to recover from financial losses initiating turnaround of this entity so as to make this merger a success, but could not achieve any during the course of last five years. This case explores to see the reasons for such a merger snag and identifies the issues that could be tackled to overcome from the present problem.