Is it a worthy love affair? Are we simply romanticizing the recent acquisition by Tata Sons winning the bid and at long last, acquiring the national carrier? It seems like a homecoming for Air India (AI)… like the Airline’s come full circle to begin another chapter under the custodianship of Tatas!
So, what does it mean for the Airline? What does it entail for the thousands of employees of AI which has been operating with losses and debts accumulated over decades? Will it undergo a complete revamp? Will passengers once again enjoy the Maharaja treatment on board? Will Air India be able to shirk off its disreputable reputation for delays and cancellations? Will it go back to being India’s pride and joy in the skies, where every passenger was treated to a downright royal pampering with all the comforts of home?
The History: Air India was the brainchild of legendary industrialist and philanthropist, JRD Tata – India’s very first licensed pilot… a great feat in those days! Fascinated with aviation, our lionhearted JRD soon established India’s first commercial airline – Air India, in 1932. Its first scheduled service in that same year was flying mail on some routes for then Imperial Airways. In 1946, the Aviation Division of Tata Sons was listed as Air India and in 1948, ‘Air India International’ was launched, with flights to Europe. The international service was among the first public-private partnerships in India. In 1953, Air India was nationalized. Over the next four decades, it remained India’s prized possession, controlling the majority of the domestic space. It was with the opening of the skies and the aviation sector in 1994 -1995, that private players entered Indian skies, and changed the face of Indian aviation, offering cheaper tickets and better options. Consequently, Air India lost its monopoly and market share.
In 2000-2001, the NDA government tried unsuccessfully to sell a minority stake in Air India, as part of its broader privatization and disinvestment push. By 2007, it was suffering massive losses, when Air India and Indian Airlines merged. In 2012, a turnaround, Financial Restructuring plan was approved for Air India by the UPA government. In 2017-2018, the Modi-led NDA failed in its first attempt at selling its stake in the state-owned airline. In 2021, the BJP’s second attempt finally took off, nearly 12 months after it was first announced.
Sixty-eight years later, the Maharaja is all set to return to the Tata group. It’s taken over two decades and three attempts for the government to finally sell its flagship national carrier, Air India, after setting the reserve price at Rs. 12,906 crore and the Tata group winning the bid at Rs. 18,000 crore.
The Tatas now own 100% stake in Air India, 100% in its international low-cost arm – Air India Express; and 50% in the ground handling joint venture – Air India SATS. The Tata’s now have 141 planes and an access to a network of 173 destinations, including 55 international ones, with the ownership of the iconic brands Air India, Indian Airlines and the Maharajah.
The Future: Air India’s new journey to return to its lost glory, under the Tata Group, will be fraught with issues like redundant/older aircrafts, inferior cabin products, and human resources problems. But experts and global competitors view the airline becoming a challenger in the international skies, soon.
Currently, Air India is the largest among Indian carriers in the global space, commanding enviable airport slots for its international arrivals and departures, on which airlines invest millions. However, due to the pandemic, foreign airlines have assumed a larger market share, carrying more passengers than Air India, till the regularization of international flights.
It’s going to be a herculean task for the Tatas to channel their focus on rebuilding the Airline’s past glory. But there’s ample opportunity for Air India in terms of international traffic that is currently enjoyed by various global carriers. If one were to view Air India’s success on the India-US routes, there’s a clear indication of demand for direct flights on Indian airlines, provided it meets the expectations of the passengers.
Look at the mass exodus of flights and air traffic passengers to the Middle East, in the last couple of decades, enjoyed by big international carriers. Pre-Covid, the Dubai-based carrier, ‘Emirates’ alone operated five to seven flights between Mumbai and Dubai, daily. With flights full and hoards of Indian passengers going to and fro, will Tata’s management efficiency allow Air India to better exploit operating assets like these lucrative routes to South East Asia, the Middle East, Latin America and Australia? With simple improvements in consistency of service, Air India’s existing bilateral seems like goldmines.
Air India may also need a complete image makeover to attract young fliers, who constitute a large percentage of fliers, to become the preferred airline for young Indians, worldwide. Millennials make up 53% of an international airline’s passengers and that number is only rising. However, the needs of millennials are very different from the kind of products and services offered by Air India, presently. Attracting millennial will mean positioning themselves and the airline as a modern, technology driven, innovative, environmentally-conscious airline, as opposed to being perceived as relic rising from the ashes. It would include importing expertise to realize a revival plan that spruces Air India’s image and traffic.
Tata’s acquisition of Air India seems to be one of India’s most successful privatization efforts yet – one that should allow the national carrier to create shareholder value by benefitting its employees and customers, but most importantly, to infuse the entire aviation ecosystem in India with the much-needed boost. Here’s looking to our much-loved Maharaja’s bright and brilliant future, with great optimism! Here’s to the Phoenix rising from the ashes!!