Air India's homecoming: A journey of Tata's love for aviation
- Tata Sons on Friday won the bid to acquire Indian carrier Air India
- The conglomerate bid 18,000 crore to takeover the national carrier
- Tata Airlines went public in 1946 as a 'joint stock company' named Air India
Multinational conglomerate Tata Sons on Friday won the bid to acquire Indian carrier Air India. With a bid of Rs 18,000 crore, Ratan Tata and company are back in the airlines' cockpit, about half a century later it had lost control to the Centre. The transaction to re-acquire Air India is expected to be closed by December 2021.
"Talace Pvt Ltd of Tata Sons is the winning bidder at Rs 18,000 crores. The transaction is expected to close by the end of December 2021," Department of Investment and Public Asset Management's Tuhin Kant Pandey said in a press conference.
India's bleeding national carrier is expected to get a boost with privatisation. While many airlines have come and gone from the Indian skies since the time when the first move was made to privatise Air India to date, the salt-to-software conglomerate has never let the love affair with aviation, more so with Air India that its former Chairman Jehangir Ratanji Dadabhoy Tata (JRD) had, to go off the radar.
Air India's journey in brief:
Tata Airlines went public in 1946 as a 'joint stock company' named Air India and the maiden flight on June 8, 1948 of Air-India International -- the first public-private enterprise of independent India -- with its iconic mascot Maharaja to Europe, remain the breakout landmarks in the skies of the group.
Air-India International became one of the best airlines in the world with staff, maintenance and services provided by Tatas' domestic airline Air India.
Contrary to the time taken to privatise the current Air India, it is said that JRD was surprised when the group's proposal made in October 1947 to float Air-India International with the government holding 49%, Tatas 25% and the rest by public was accepted "within weeks", at a time when it took at least two years "not to make a decision".
However, the flights have not been without headwinds. In 1953 when the then government of Jawaharlal Nehru nationalised Air India, JRD fought vehemently against it. There was very little the group could do when the government decided to nationalise 11 airlines, all of which except Air India were making heavy losses and merge them into a single state corporation.
After the nationalisation of Air India, the group's link with civil aviation was through JRD who served as the state carrier's Chairman for 25 years. Yet, the group kept the fire of re-entering the aviation sector burning.
In the 90s, when India's civil aviation sector was opened up to private players, the group's attempt to float a domestic airline in partnership with Singapore Airlines ended in disappointment with the government rejecting the proposal.
In 1994, the Tata group under Ratan Tata's stewardship, had set up a joint venture with Singapore Airlines to start a domestic airline in India but it didn't take off as the then regulations did not permit foreign carriers to hold stake in domestic airlines.
Also, in 2000 the two partners teamed up to purchase stakes in Air India without success.
Still, the group never gave up on its hopes to fly again. In 2012 when India removed foreign investment restrictions, it came together yet again with Singapore Airlines to form a joint venture -- TATA SIA Airlines Ltd, which was incorporated on November 5, 2013, to operate a full service domestic airline under the Vistara brand. The airlines in which Tata group promoter firm Tata Sons holds 51 per cent stake and Singapore Airlines 49 per cent, had its maiden flight from Delhi to Mumbai on January 9, 2015.
Since then it has spread its wings, serving 40 destinations with over 200 flights daily with a fleet of 47 aircraft.
A year before Vistara took off, Tatas had entered the low-cost, no frills flying segment through a joint venture with Malaysia's AirAsia to fly under the brand AirAsia India, which had its first flight from Bengaluru to Goa in June 2014. It connects 17 destinations in the country at present.
However, AirAsia India, in which the Tatas held 51% stake and Air Asia 49% initially, ran into losses with the COVID-19 pandemic adding to the woes. Last December, Tata Sons agreed to increase its stake in the budget carrier to 83.67% by acquiring an additional 32.67 per cent for USD 37.66 million from AirAsia Investment Ltd (AAIL).
The Malaysian partner had said its business in Japan and India were draining cash, causing the Air Asia Group much financial stress and therefore it was reconsidering its investments in India.
While the homecoming of sorts of Air India will be a joyous moment for the 153-year-old conglomerate, it remains to be seen how would it map the future of its airlines business, considering the fact that the aviation industry crippled by the pandemic is yet to recover from the deadly blows.