Can Mergers Save India's Airlines?

The Wharton School published an article looking at consolidation in the Indian Airline industry and found that, like in the United States, mergers will not solve the underlying problems associated with air travel. The piece focuses specifically on the Air India - Indian tie-up, which will likely show increasing losses in the year following the merger. The authors suggest that labor unrest and corporate culture could doom mergers in the industry.

The culture issue is one facing Kingfisher and Deccan head on, as execs try to figure out how to bring together a culture of providing premium service with one focused on lower costs. At the same time, they are trying to keep two separate brands - a feat that is at least as big a challenge as higher fuel costs and downward pricing pressure.

The authors offer no suggestions but hint that success may lie in growing the airline routemaps to include overseas destinations, an area where Air India has had some success and Kingfisher is scratching to go.