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A parliamentary committee on Friday lambasted the decision to merge Air India and Indian Airlines and asked the government to have separate domestic and international airlines under a single holding company.
It also recommended fixing of responsibility on 'agencies and individuals' who took such a 'whimsical' decision and sought 'suitable action' to prevent such 'intangible loss' being caused to a state-run company.
Describing the merger as 'ill-conceived and erroneous', the Committee on Public Undertakings said, "The root cause of the ills plaguing National Aviation Company of India Limited is the 'merger' which was flawed at its very inception and which never really took off."
In its hard-hitting report tabled in Parliament, the COPU, headed by Congress leader V Kishore Chandra S Deo, said the multiplication of losses suggested 'something radically wrong either with the projections of the benefits of the merger or with the implementation of the merger.'
It recommended converting NACIL into a holding company under which NACIL-Indian Airlines with its headquarters in Delhi and NACIL-Air India with headquarters in Mumbai would function.
Each of the entities should be headed by a Managing Director who would report to the chairman of NACIL, it said, stressing that the government should 'immediately' work this out.
Asked about a similar recommendation of a holding company and two separate entities for domestic and foreign air services made by the Parliamentary Standing Committee, Deo said, "This only strengthens our findings. We presented our report with the hope that our recommendations will be met."
Attacking the civil aviation ministry, the COPU said, 'having imposed the merger' of the two airlines, it 'has shown little initiative in monitoring the progress' and its 'failure' in not ensuring continuity of leadership.
While there was 'no justifiable explanation for this abrupt haste' to merge the two carriers, it said, "The so-called merger is a kind of marriage between two incompatible individuals having wide variances with hardly any meeting ground."
Recommending capital infusion to make NACIL credit worthy, it said strict compliance to defined performance benchmarks should be made a precondition to a phased capital infusion.
It took the government to task on route rationalisation saying disadvantage was caused to the national carrier in allocation of prime commercial routes which favoured not only private airlines like Jet Airways and Kingfisher, but also foreign carriers like the Emirates.
The parliamentary panel asked the civil aviation ministry to conduct a 'transparent review' of the entire route and slot allocations to ensure that NACIL was not put at any disadvantage.