AIRLINES' MERGER LAW ENACTED IN INDIA

The Indian government has formulated a policy governing the use of airport infrastructure in case of mergers or take over of one airline by another or in case sale or transfer of aircraft from one company to another. The guidelines were framed anticipating likely corporate maneuvers in the booming aviation industry that will govern future mergers and acquisitions. The guidelines cover the user rights over such infrastructure that are given to an airline on non-payment basis like the parking bays, landing slots and other facilities may be allowed to be used by the airlines that takes over the aircraft. For all other rights, the terms of lease and sale agreement between airport operator and airline will apply. While the guidelines allow 100 percent transfer of all assets of one airline to another in the case of a merger or acquisition including aircraft, flight routes and schedules and even parking bays, they do not grant 'grandfather rights' to an airline acquiring the entire assets of another. This means that all assets will be transferred to the new company, but it will not be able to lease out or sell the acquired property. This will also help ease Jet Airways' troubled plan to merge rival Air Sahara with it. The Jet-Sahara deal, the biggest ever in Indian aviation, got delayed as the government did not have a policy on mergers.