New Delhi, March 16:

The mooted merger of India’s two state-run airlines, Air India (AI) and Indian, is likely to happen within the current fiscal year, civil aviation minister Praful Patel said today.

“It is an absolutely logical proposal to consolidate and optimise the use of the assets of the two public sector airlines,” Patel said. The government was expected to approve the merger to create a major airline with 125-130 aircraft, he said.

“This should happen within 2006-07,” Praful said, referring to India’s fiscal year ending April 2007. The two airlines, which face growing competition from private carriers, were already trying to synergise their operations, he said.

Both airlines are due to issue Initial Public Offers (IPOs) and Praful said the merger decision could be implemented at the same time as the IPOs.