India’s national carrier Air India has been in the doldrums on several occasions, requiring financial bailouts and aid from the government. The government owned airline is known for offering poor service and has been making losses as well. Recent reports that the airline may be taken over by one of India's most respected+ business houses, the Tata Group have been welcomed by many in the business community. It would also be a case of flying back to base for the airline. Here’s why:
JRD Tata, India’s pioneering businessman and himself a pilot founded the airline in 1932 as the aviation department of Tata Sons. JRD was the first Indian to get a commercial pilot’s license.
The airline started as a weekly airmail service and the first flight was JRD flying the de Havilland Puss Moth from Karachi to Mumbai. Tata Airlines became a public limited company in 1946 under the name Air India.
The airline was taken over and nationalized post independence. This was against JRD’s wishes, who said that the government had no experience of running an airline and that this was not in the public interest. At the request of Pt Jawaharlal Nehru, JRD stayed on as the airline chairman for 25 years until the then Prime Minister Morarji Desai sacked him in 1977.
Air India had a monopoly for decades before private airlines were permitted access to Indian skies. It was only in 1992 that Jet Airways gave us any kind of alternative to the stodgy, truculence of Air India staff and the persistent feeling of grudgingly granted sarkari services.
In spite of its long monopoly and frequent handouts from successive governments, Air India is only the third largest carrier in the country after IndiGo and Jet with a market share of just 13%. The airline currently owes a staggering Rs 52,000 crores. This infographic tells its own story.
The idea was also mooted when Atal Bihari Vajpayee was the Prime Minister; when privatisation of both Air India and Indian Airline (then two separate entities) was considered. Currently the government is considering whether to opt for partial disinvestment or outright sale.
Former Executive Director of Air India Jitendra Bhargava
Former Executive Director of Air India and author of The Descent of Air India Jitendra Bhargava has said that this would be the best thing to happen to the airline. Sunil Mittal, chairman of telecom major Bharti Airtel, has also opined that Tata would be the best option.
While everyone may want Air India to be privatized and government just seems to want the troublesome white elephant Maharaja off their hands, does Tata want to take on the non-performing asset? According to reports the $104 billion group wants the government to significantly reduce its current debt before any kind of acquisition; and even then, the Tata Group appears to be interested in buying a 51% stake in the company; not the entire airline. Tata doesn’t seem interested in Air India flying back to base just yet, it would seem.
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