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Air France's KLM buy may not affect India

Ashwini Phadnis

New Delhi , May 5

THE announcement of Air France buying KLM Royal Dutch Airlines NV and creating the world's largest airline group in revenue terms is being viewed as a beginning of a major consolidation in the global aviation industry.

"Whether you call it an alliance or takeover globally, things are moving in that direction. Why should the airline industry be any different? In fact, close to a decade ago, a former Air France chief had foreseen such a move. At a meeting of the International Air Transport Association, the airline chief had then mentioned that soon there would only be a handful of airlines left globally. It would seem that the statement made then is coming true," an industry analyst said.

While officials of both the airlines were not available for comment, a cross-section of industry and airline officials had diverse views on what impact the buyout will have on India. Interestingly, both the airlines have a considerable presence in India with Air France alone operating a daily flight from both Delhi and Mumbai. In addition, KLM operates a daily fight from Delhi apart from offering regular connections from Mumbai.

"As the merger will make it the largest European carrier it will provide a compelling presence in the Indian market vis--vis the other European airlines operating here. Besides, India and France have been strategically close and the merger is likely to help the process consolidate further," said Mr Kapil Kaul, Senior Vice-President, Indian Sub-Continent, Centre for Asia Pacific Aviation.

On the issue of what impact the move will have on airfares, Mr Kaul felt that it was unlikely to have any impact in the short term.

The President of the Travel Agents Association of India, Mr Balbir S. Mayal, however, expressed worries about whether the merger could lead to an eventual reduction of flights to and from India. "At present both the airlines are operating to India. If the merger leads to a decrease in flights that will hurt the Indian market as we are already short of air seat capacity," Mr Mayal said.

A senior official of an international airline operating several weekly flights into and out of India added that despite the announcement being a major one the operations of the two airlines in India were not so huge that they would be able to "shake and upset" the Indian market.

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