New Delhi: Tata Sons Pvt formally took charge of debt-laden Air India Ltd., ending years of failed attempts to sell the money-losing airline that has been kept afloat with billions of dollars of taxpayer money.
"It is indeed noteworthy that the disinvestment process of @airindiain has been brought to a successful conclusion in a time-bound manner," aviation minister Jyotiraditya Scindia said in a Twitter post. "This proves the govt's ability, and the resolve to carry out disinvestment effectively in non-strategic sectors in the future."
The successful conclusion of the deal, India's first major privatization in nearly two decades, is a big victory for Prime Minister Narendra Modi, who has vowed to steer the state away from running businesses as his administration tries to plug a budget deficit. The move also marks a homecoming for Air India, which was originally launched in 1932 by Tata Group's former Chairman J.R.D. Tata as the nation's first carrier, flying mail between Karachi, then a part of undivided British-ruled India, and Bombay.
Reviving Air India - whose market share more than halved to less than 10% last year - will be a daunting task for the biggest conglomerate in India, which already runs two other unprofitable carriers. While Air India's regional arm, Alliance Air, is not a part of the deal, the group is also gaining control of low-cost, short-haul international carrier Air India Express and an equal stake in a ground handling company with SATS Ltd.
The group was selected as the winning bidder in an auction in October, in which it bid 180 billion rupees as an enterprise value for Air India, including taking on 153 billion rupees of the airline's debt. Air India also comes with a highly unionized workforce with a history of disrupting schedules for demands, and an aging and mixed fleet of more than 150 aircraft, potentially complicating a revival.
Tata Sons has yet to spell out its plans for Air India, which loses 200 million rupees ($2.7 million) every day. Potential options include merging the flag carrier with one of its other airlines - Vistara venture with Singapore Airlines Ltd. and AirAsia India Ltd. with AirAsia Bhd. - or keeping it independent. The terms of the deal prevent the new owner from firing any employee for at least a year.
The competition for Tata's airline business will also intensify with bankrupt Jet Airways India Ltd. preparing to fly again, and billionaire investor Rakesh Jhunjhunwala's newly formed carrier, Akasa, gearing up to start operations.
The government has failed twice in the past to sell the airline. More than two decades ago, Singapore Airlines Ltd. gave up a joint bid with Tata for a stake in Air India, citing political opposition as one of the reasons. IndiGo, India's biggest airline, dropped out of the running in 2018, saying it didn't have the means to buy the carrier in its entirety and make it profitable.
EARLIER STORY
Tata Sons chairman Chandrasekaran meets PM ahead of Air India handover
New Delhi: Tata Sons Chairman N Chandrasekaran on Thursday met Prime Minister Narendra Modi in the national capital before formal takeover of Air India.
"Shri N Chandrasekaran, the Chairman of Tata Sons called on PM," the Prime Minister's Office said in a tweet after the meeting.
This meeting is the final call, in aviation lingo, that now Air India is no longer a government of India enterprise, and has become a private entity.
The meeting came after Air India handed over the balance sheet till January 20, 2022 to Talace, an aviation subsidiary of Tata Sons, who will manage the Air India, Air express and Air India's ground handling service. The Tata Group executives reviewed the balance sheet and had an option to ask for any correction till january 24, after that the government of India will hand over Air India, Air Express and its ground handling service to Tata Group, and with this 100 per cent disinvestment in Air India, a government PSU, will be completed.
Chandrasekaran is also scheduled to meet key officials of the Central government before the formal handing over ceremony of Air India.
Tata group already has announced an 'enhanced meal service' in Air India's four flights, namely AI864 Mumbai-Delhi, AI687 Mumbai-Delhi, AI945 Mumbai-Abu Dhabi and AI639 Mumbai-Bengaluru from January 27 only. This will be expanded in other flights and routes in a phased manner.
Along with this, grooming of cabin crew is already suggested by the TATA Group management as they say the crew members are the brand ambassadors of airlines. Also in flight announcements will address passengers as 'Guests', and a recorded message of Ratan Tata will be played in each and every flight. But the first and foremost priority of TATA is to work on Air India On Time Schedule.
