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This article was first published 2 years ago  » Business » Tatas are committed to make Air India a world-class airline: Chandra

Tatas are committed to make Air India a world-class airline: Chandra

Source: PTI
Last updated on: January 27, 2022 22:03 IST
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Nearly seven decades after it lost control, Tatas on Thursday regained ownership of Air India and promised to turn the loss-making carrier into a world-class airline.

N Chandrasekaran, chairman of Tata Sons, which in October last year beat a consortium led by rival SpiceJet promoter to win the bid for the national carrier, first called on Prime Minister Narendra Modi before heading to the Air India office where the takeover formalities were completed.

A new board of directors met shortly thereafter, formalising the management takeover.


Tata Group founder JRD Tata had originally launched the airline in 1932 as the nation's first carrier, flying mail between Karachi in then-undivided, British-ruled India and Bombay.

It was nationalised in 1953.

The finance ministry in a statement said the Air India strategic divestment transaction has been completed on Thursday with the government receiving a consideration of Rs 2,700 crore from Talace Pvt Ltd, a wholly-owned subsidiary of Tata Sons.

The government has retained debt of Rs 15,300 crore in Air India and Air India Express Ltd (AIXL) while 100 per cent shares of Air India, AIXL and the national carrier's 50 per cent shareholding in AISATS have been transferred to Talace.

In a tweet, Department of Investment and Public Asset Management (DIPAM) secretary Tuhin Kanta Pandey said the strategic divestment transaction of Air India has concluded successfully with transfer of 100 per cent shares of Air India to Talace along with management control.

"A new board, led by the strategic partner, takes charge of Air India," Pandey said after completion of the handover process at the airline headquarters in New Delhi.

Civil Aviation Minister Jyotiraditya Scindia said Air India will bloom under the wings of the new owners and the airline will pave the way for a thriving and robust civil aviation sector in India.

In October last year, Tatas won the bid for Air India through a competitive bidding for Rs 18,000 crore, including the cash component of Rs 2,700 crore.

"We are excited to have Air India back in the Tata Group and are committed to making this a world-class airline," Tata Sons chairman N Chandrasekaran said in a statement.

"I warmly welcome all the employees of Air India to our Group, and look forward to working together," he said.

In a statement, the group said Chandrasekaran was joined by Chairman Emeritus of Tata Sons Ratan Tata in acknowledging and thanking "the Government of India and its various departments for the successful completion of this important transaction".

Announcing that it has taken over the management and control of the airline, starting Thursday, the group acknowledged Modi's "commitment to reforms and faith in India's entrepreneurship spirit, which made this historic transition possible".

"Our prime minister has in action demonstrated what his commitment to 'Minimum Government, Maximum Governance' means.

“We philosophically agree with the Prime Minister's vision for the aviation sector, of making it affordable and ensuring it contributes to boosting 'Ease of Living' for citizens," the statement said.

Separately, a consortium of lenders led by State Bank of India (SBI) has agreed to provide loans to Tata Group for the smooth operations of loss-making Air India.

When the Tata Group won the bid to acquire Air India in October last year, Ratan Tata had tweeted an old photograph of the company's former chairman JRD Tata getting down from an Air India aircraft, stating, "Welcome Back, Air India".

"The Tata Group winning the bid for Air India is great news.

“While admittedly it will take considerable effort to rebuild Air India, it will hopefully provide a very strong market opportunity to the Tata Group's presence in the aviation industry," he had said.

Tatas, Ratan Tata had said, will have the opportunity of regaining the image and reputation it enjoyed in earlier years.

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.

It is said that Tata group executives used to complain in private that JRD -- the pioneer of the Indian aviation industry -- spent more time worrying about Air India than the Tata Group when he was heading both the entities.

Nevertheless, they also knew heading Air India as chairman was never just a job but was a labour of love for him.

From the first airmail service flight from Karachi to Bombay in October 1932 with JRD steering a Puss Moth aircraft to wresting control of Air India 89 years later, the conglomerate has had a roller coaster ride in the Indian civil aviation history.

Tata Airlines going 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.

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 per cent, Tatas 25 per cent 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.

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.

 The joint venture started services under Vistara brand from January 2015.

A year before Vistara took off, Tatas through a joint venture with Malaysia's AirAsia set up AirAsia India, which started flying in June 2014.

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.

Photograph: Vivek Prakash/Reuters

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