Indian Kanoon - Search engine for Indian Law

4. The undertakings of erstwhile Air India and Indian Airlines were transferred to and vested in Air India Limited and Indian Airlines Limited, Public limited Companies registered under the Companies Act, 1956 with effect from 1st March, 1994 subsequent to the enactment of the Air Corporations (Transfer of undertakings and repeal) Act,1994.

5. Since then the aviation sector in India has undergone a substantial transformation in terms of growth accessibility and affordability. One of the major changes was the opening of Indian Skies to private players I the early 1990s, in the wake of „Open sky policy‟ of the government. This deregulation, in fact, led to new operators entering the aviation market that challenged the monopoly enjoyed by the government owned carriers in the aviation market. The competition so generated has resulted into reduced fares, increased seat availability and better service than available so far. Introduction of no frill Low Cost Carriers (LCCs) and a cut throat reduction in fares significantly dented the operations and profitability of the national carriers.

6. It was then felt that in an increasingly consolidating global aviation environment, where „critical mass/size‟ is a key success factor, combining the two state owned airlines into a single merged entity would better equip them to survive and prosper amidst fierce global and domestic competition as it would provide an opportunity to leverage combined assets and capital better and build a stronger sustainable business.

7. The theory of merger of airlines, till then an international phenomenon, therefore, started to be considered seriously in the aviation market. The concept of merge or perish, in fact, became the new mantra not only of the state owned but amongst private airlines also.

c. The committee could not comprehend why the NACIL Management and the Ministry of Civil Aviation went ahead after 2005 with the expensive proposition of leasing of aircrafts that to without any exit clause. The committee also notes that even after the new Aircraft delivery to NACIL, the company continued to lease Aircrafts or renewed the leases on some pretext or the other, which caused huge loss to the company at the time of recession, low seat factor and underutilization. All such decisions taken by the Management and the Ministry of Civil Aviation had ultimately resulted in big financial loss to the company.

36. On this aspect the submission of the Respondents is that the government has already established Directorate General of Civil Aviation (DGCA) as a principle regulatory body in the field of civil aviation in India. DGCA is responsible for regulation of air transport services to/from/within India, formulation and enforcement of civil aviation regulations, air safety, air worthiness standards and also standards and also coordinates all regulatory functions with International Civil Aviation Organisation (ICAO).