India could eventually merge two struggling airlines

Subject

Difficulties of Jet Airways, Air India and India's aviation sector more widely.

Significance

Jet Airways last week suspended operations after a bailout consortium of public sector banks refused to release emergency financial support. Separately, the government last year failed to attract a buyer for state-owned national carrier Air India.

Impacts

• The Indian government will come under pressure to step up investment in airport infrastructure.
• Aviation players in India and beyond will increasingly view their operations as a gamble on global fuel prices and currency exchange rates.
• The practicability of India’s 2016 Insolvency and Bankruptcy Code will likely come under increasing doubt.