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Thursday, February 2, 2023

Tata Group Acquires Air India

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Sixty-eight years after Air India was founded as Tata Airlines and then taken over by the government in 1953, Tata Sons has become the new owner of the national carrier for $2.7 billion. Ajay Singh, the creator of SpiceJet, presented the other offer for the flag airline.

“I am confident the Tata Group will restore the glory of Air India,” said a gracious Singh. “The [government] ran a successful divestment.

[It was] a transparent and flexible process.” A statement from Tata Sons chairman N. Chandrasekaran called it “a historic moment, and it will be a rare privilege for our Group to own and operate the country’s flag-bearer airline.” He paid tribute to J.R.D. Tata, whom he called a “pioneer of Indian aviation, whose memory we cherish.”

Tata’s third airline acquisition is Air India. It also has a majority investment in full-service Vistara, which it shares with Singapore Airlines, and AirAsia India, which it shares with Malaysian AirAsia.

When the deal is completed by the end of the year, Tata would hold 100% of Air India, its lucrative subsidiary Air India Express, and 50% of the joint venture with Singapore Airport Terminal Services (SATS), which provides ground handling services at Indian airports.

It will also receive a renovated brand, 2,000 engineers, 1,600 pilots, and a slew of collaborations, including Star Alliance. According to Rajiv Bansal, secretary of the Ministry of Civil Aviation, the Tata Group would keep present Air India staff for the first year.

“In the second year, they will decide who to keep and can also offer voluntary retirement from service,” he explained.

Former Air India executive director Jitender Bhargava, author of Descent of Air India, told AIN that the airline needed to divest or risk liquidation.

“Disinvestment was Air India’s only option,” he stated. “The administration has brought everything to a logical conclusion. The challenge ahead is daunting, but Tata has the ambition to establish global standards and give the brand new vitality.”

The action, according to Kapil Kaul, CEO of the CAPA India consultancy, will have a long-term positive influence on the Indian aviation business. “It will take three to five years for the airline to be restructured and profitable,” he projected.

Air India’s fleet consists of 117 wide- and narrow-body planes, with AI Express flying 24 Boeing 737-800s. Air India carried 63 million passengers in 2020, giving it a 26 percent market share on 172 domestic routes.

It has more overseas routes than any other Indian carrier. The international market accounts for more than two-thirds of its total income.

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