With a rehab plan for Air India proving to be a fraught task, a proposal to undo the decision to forge Air India and Indian Airlines into a single entity has been mooted by the finance ministry. The ministry, which has to foot the bill for any revival package, is understood to be increasingly nervous over the viability of bailout plans for the floundering carrier.
At the time of merger, in August 2007, the government's step was too much criticised. However, the merger NEVER moved beyond a common billboard, a holding company and a common web page. Now, see what logic is being given in support of demerger, "International and domestic aviation markets behave differently. Their problems are specific and have to be different."
In spite of demerger, it's believed, the domestic and international operations of Air India would continue to function as separate units.