The entities interested in Air India acquisition, including Tata, submitted physical bids by December 29, 2020. The successful bidders will be intimated on January 5, 2021.
In 1932, Air India began operating as Tata Airlines as part of the business empire helmed by its founder JRD Tata, the legendary Indian industrialist. The airline carried mail and passengers between Indian cities of Ahmedabad, Bombay, Bellary, Madras, and Karachi (now in Pakistan). Within a few years, Tata Airlines’ routes included the Indian cities of Trivandrum, Delhi, Lahore (now in Pakistan), and other locations like Colombo, Sri Lanka.
Watch: JRD Tata, the founder of Air India
The airline became a public company in 1946 and was renamed Air India Limited with the government holding a 49 percent share in the company. Much success was enjoyed by India in the airline industry. For example, most of the pilots as of that time were native-born whereas other neighboring countries had to go outside for the expertise.
Highs and Lows of Air India
Since Air India went public with the government taking almost a 50 percent stake, the airline has recorded many successes as well as failures. In June 1985, one of its Boeing 747 jumbo jets plying from Toronto to Bombay, crashed into the sea killing all 329 passengers on board. A Canadian Safety Board Report, addressing an inquiry by Indian High Court Judge Bhupinder Nath Kirpal, concluded that an explosive device was the probable cause of the crash, claiming that an X-ray machine at Pearson International Airport in Toronto broke down before all the luggage had been checked.
From the year 1974-75 to the year 1983-84, Air India’s productivity almost doubled, translating from a per-employee production of ₹125,000 in operating revenue in the fiscal year (FY) 1974-75 to ₹439,000 in FY1983-84. Despite this, Air India lost $23 million in FY1987-88.
The Divestment of Air India
With piling losses, multiple rounds of massive injections, the Maharaja of Indian skies had lost its sheen by the turn of the century. The national carrier gradually lost its top spot and market share to private carriers Jet Airways, Indigo and Spice Jet. In January 2020, the Indian government had already made up its mind to sell Air India. The panel consisting of the Union home minister Amit Shah-led group of ministers (GoM) approved the expression of interest (EoI) after gauging the interest of potential buyers and reportedly making a significant decision on Air India’s debt which stood at ₹58,351 crore at the end of March 2019.
So far, the government has received multiple expressions of interest (EoI), making it the second attempt at disinvesting its stake in Air India after the first attempt in 2018 failed to conjure up any deal. The front-runners among firms that have shown interest this time were:
- The Tata Group
- A consortium of Air-India employees and Interups Inc.
The entities interested in Air India acquisition, including the Tata Group, submitted physical bids by December 29, 2020. Despite heightened interest, US fund Interups pulled out from the running after an employee consortium refused to join hands. Interups’ withdrawal has left Tata Group’s bid primed as the favorite to land Air India.
The successful bidders will be intimated on January 5, 2021.
Views around Air India going back to Tata
As the bids are been considered, some experts and stakeholders have express skepticism while others see the proposed Air India privatization bid as a positive move. Many aviation industry experts are backing Tata as the savior of the prestigious airline, stating that the Government should consider Tata over others.
Air India was created by the Tata family. It is said that founder JRD Tata was visibly upset when the government congress took the decision to nationalize the airline. Some still argue that it was one of the worst long-term decisions ever made in India’s history, wondering it staying with Tata would have kept the airline profitable.
Over the last year, several the names of big corporate houses have emerged as prospective buyers interested in acquiring the national airline. Names linked to Air India privatization include Mukesh Ambani’s Reliance Group, Gautam Adani’s Adani Group, an Etihad-Indigo joint venture and finally Interups Inc. and Tata Group. The government is still considering the suitors as the final decision will be made public in the coming week. Some Indian citizens are of the opinion that Tata Group should be the rightful winner in the Air India acquisition bid.
Among the first private corporations to be nationalized in independent India, Tata bidding to buyback Air India from a government desperate to offload it is literally a full circle for the historic airline. However, the deal is yet to be signed.