Travel Trade Journal


- Team TTJ

After 68 years, Air India is all set to return to the Tata fold. The Tata Group’s holding company, Tata Sons, through its wholly-owned subsidiary Talace Pvt Ltd, submitted a winning bid of `18,000 Crore as the Enterprise Value of Air India. The government aims to complete the transactio­n by December 2021, when it will transfer its shares and hand over the airline to the new buyer.

JRD Tata was 15 when he took a joyride in a plane in France and decided he would become a pilot. In 1932, he pioneered the aviation industry in India, when he set off on the inaugural flight from Karachi to Bombay.

“On an exciting October dawn in 1932, a Puss Moth and I soared joyfully from Karachi with our first precious load of mail, on an inaugural flight to Bombay. As we hummed towards our destinatio­n at a ‘dazzling’ hundred miles an hour, I breathed a silent prayer for the success of our venture and for the safety of those who worked for it. We were a small team in those days. We shared successes and failures, the joys and headaches, as together we built up the enterprise which later was to blossom into Air-India and Air-India Internatio­nal,” then JRD Tata had stated.

JRD Tata inaugurate­d Air India internatio­nal at the time when familiar internatio­nal airlines like Imperial Airways, KLM and Air France were ruling the aviation industry on the India-United Kingdom route.

75 years ago, the creator of its ‘Maharaja’ brand, Bobby Kooka’s idea, was to create an image for Air India’s notepad that would resemble chivalrous, royal and stylish living. These thoughts made the Maharaja’s creators give him a distinguis­hed appearance, heavy coal-black moustache, hooked nose and a typical Indian turban. In due course, the majestic figure gained popularity and became Air India’s mascot for its sales, advertisin­g, and marketing activities. Gradually, the brand and product collaborat­ed to give travellers the ‘magic carpet service,’ which the world desired.

As a passenger, one felt so welcome and wanted. Those were the glory days and years of Air India.

However, the national carrier began making losses since it merged with the state-owned domestic operator, Indian Airlines, in 2007 and relied on taxpayerfu­nded bailouts to stay operationa­l. The government said it was making a loss of nearly 200m rupees ($2.6m) every day to run the airline.

However, according to Jitender Bhargava, a former Executive Director of the airline, “Air India suffered for its inconsiste­nt service standards, low aircraft utilisatio­n, dismal ontime performanc­e, antiquated productivi­ty norms, lack of revenue generation skills and unsatisfac­tory public perception.”

Despite its colossal losses, the Maharaja continued to spread its wings and fly across continents and continued connecting places throughout the world. Presently, the Maharaja has been actively involved in the government’s ‘Vande Bharat Mission’ and has flown to more than 54 nations.

Meanwhile, the government was seeking to sell 100 per cent of its stake, including Air India’s 100 per cent shareholdi­ng in AI Express Ltd and 50 per cent in Air India SATS Airport Services Private Ltd. The stake sale process, which began in January 2020, faced delays due to the COVID-19 pandemic. In April 2021, the government asked potential bidders to put in financial bids was September 15. Tata Group was among the multiple entities that had put in an initial expression of interest for buying the Maharaja.

The government had set the minimum reserve price for national carrier Air India’s disinvestm­ent after final bids were submitted by Tata Sons and SpiceJet promoter Ajay Singh earlier this month. However, the Tata Group emerged as the successful bidder of the divestment process of the national carrier. Consequent to the acquisitio­n, the Tatas will own a 100 per cent stake in Air India and also 100 per cent in its subsidiary Air India Express and 50 per cent in the joint venture Air India SATS (airport services on ground and cargo handling). The total permanent and contractua­l employee strength of Air India and AIXL is 13,500.

Commenting on the developmen­t, N. Chandrasek­aran, Chairman, Tata Sons Pvt Ltd said, “This is a historic moment, and it will be a rare privilege for our group to own and operate the country’s flag bearer airline. It will be our endeavour to build a world-class airline that makes every Indian proud. On this occasion, I would like to pay tribute to JRD Tata, pioneer of Indian aviation, whose memory we cherish.”

The Tatas will get ownership of iconic brands like Air India, Indian Airlines and the Maharajah. Air India has a fleet of 117 wide-body and narrow-body aircraft and AIXL has a fleet of 24 narrow-body aircraft. A significan­t number of these aircraft are owned by Air India.

Air India provides a unique and attractive internatio­nal footprint. More than 2/3rd of Air India’s consolidat­ed revenues come from the internatio­nal market. It is the number one player from India in the internatio­nal market having a strong footprint across geographie­s like North America, Europe, and the Middle East with attractive slots and bilateral rights. The Air India frequent flyer program has more than 3 million members.

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