New Delhi, Mar 2 (UNI) Civil aviation minister Praful Patel told parliament today that the objective to merge Air India (AI) and Indian is to create a world-class airline in close cooperation with all their employees.

Both national carriers share a proud legacy of being pioneers of civil aviation in the country, he said in a statement, a day after the union cabinet approved the proposal to merge them.

In the past decade, said Mr Patel, their market position has been adversely affected due to intense competition and their inability to induct new fleet.

Further, there has been a growing tendency of consolidation and merger in the civil aviation sector which enable the airlines to achieve synergies and reduce costs.

''I am happy to announce that the government has decided to merge both airlines into a new company which will further strengthen the public sector airlines. It is estimated that this decision will result in net benefit of Rs 600 crore at the end of third year of merger.'' Mr Patel said the new entity will be comparable to any other major airline, at least in this region. The merger will be completed in a phased manner over next two years.

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