``There is nothing that binds the government to sell Air India and Indian Airlines to different companies,'' a top source in the department of disinvestment (DoD) told The Financial Express. ``There is no monopoly issue involved in this case.'' In fact, he added, ``it will be better if the same bidder takes over both the airlines as it will help in synergising their operations.''

The issue of monopoly is a major consideration for the government on the divestment front. Finance Minister Yashwant Sinha has gone on record saying that privatisation should not lead to market dominance in any sector. The issue of monopoly has affected the course of divestment in the Indian Petrochemicals Corporation Ltd.

In the case of A-I and IA, however, there are no fears of dominance by one company, the source said. There are three bidders who have expressed interest in taking over both A-I as well as IA: the Tatas, the LN Mittal group and the Hindujas. As per the divestment plan for AI, the government has decided to offload 40 per cent of its equity, out of which a foreign company can have 26 per cent equity.

The LN Mittal group has tied up with Kotak Mahindra, British Airways and Qantas to take over AI. The Hindujas are said to be in collaboration with Ashok Leyland, while the Tatas have joined hands with SIA. Another bidder is SkyTeam, led by Air France and Delta.Emirates and the Indian Pilots Guild are also in the race.In IA's case, the government would sell 49 per cent equity toa partner, of which 26 per cent must be with the Indian company.