They say, one must not forget his or her origin. Well, Air India learnt it the hard way, but it learnt. 88 years ago, a young ‘Jeh’ or better know as J.R.D Tata laid the foundations of the present day Air India as the Tata Airlines in 1932. So much was Mr. Tata’s passion for aviation that not just he himself flew the airline’s first single-engine plane to carry air mail from Karachi but he also is the first licensed Indian pilot.
Cut to 1946, the World War II is over and the world is free and peaceful yet again. With the restoration of the regular commercial services, the airline is now being nationalized and here begins the tale of Air India, the governmentalized Tata Airlines. By 1953, the government has already become the majority stakeholder in the airlines. Nevertheless, J.R.D continued as the chairman till 1977. Around the same period, as a result of an internal restructuring, all domestic operations were transferred to Indian Airlines, while the international business was kept to Air India International Limited.
Air India continued to grow as a brand with the famous ‘Maharaja’ as its mascot, achieving several industry firsts to its name — purchased the first Boeing in 1960, becoming the first Asian Airlines to do so, became the world’s first all-jet airline, operated the first non-stop flight between New York and Delhi. But not all was good and green for the company.
The Private-Non Private Saga
The economic liberation of 1991 marked the feasible entry of private players in the aviation space, the space which was until then full controlled by Air India. With entry of these private players in 1994–95 and their competitive pricing, Air India gradually started losing market share.
In an attempt for its rescue, the very first effort to re-privatize Air India was led by Shri. Atal Bihari Vajpayee in 2001. Surprisingly or not, the contender was none other than Singapore Airlines and the Tata group. But the plan failed, mainly due to opposition to privatization by trade unions.
Year 2004 brought in Dr. Manmohan Singh as our PM and it was the year 2007 that brought the merger of Air India & Indian Airlines into one single entity. The pressure of two was now on the shoulders of one with Air India suffering losses every year since its merger. The following decade was even more stressful for Air India, requiring it to clear some of its debts in 2013 by selling and leasing back the newly acquired Boeing 787 Dreamliners.
Growing debt and falling profits, bring us to 2017, a new attempt to re-privatization, a second of its kind. The Government issued an Expression of Interest (EOI) to sell 76% stake of Air India, along with low-cost airline Air India Express, and a 50% stake of the ground handling venture. However, the plight of ₹33,392 crore debt transfer did not attract any buyers.
Finally, as for some of us, the third time was a charm for the government, a second attempt by the current incumbent. This time the offer was to sell 100% shares of both Air India and its budget carrier Air India Express as well as 50% shares of AISATS while decreasing nearly ₹30,000 crore (US$4.2 billion) of debts and liabilities in a Special Purpose Vehicle (SPV). In a competition between the Tata Group & Spice Jet’s Ajay Singh-led consortium, it was a home coming for Air India, not after 10 or 20 but 68 years!
Traveling the Tata Style — the implications & beyond
The Tata group through its ventures with Singapore Airlines (SIA) & AirAsia Investment Limited (Malaysia) is already a strong contender in the Indian Aviation industry. The return of Maharaja bring to the group access to slots at busy foreign airports, lucrative destinations such as the Gulf thanks to bilateral flying rights between India and foreign nations, membership to the Star Alliance global network, a solid mix of narrow body and wide-body planes and a trained workforce.
The acquisition is indeed a bull’s eye hit for the Tata group as it brings in aviation assets which otherwise would have taken years and a whole lot of money for Vistara to build. Through the deal the Tata Sons will get control of Air India’s 4,400 domestic and 1,800 international landing and parking slots at domestic airports, as well as 900 slots at overseas airports. All this, coupled up with a cherry on the top. According to the new plan, Tata being a successful bidder will not have to absorb any predetermined debt.
This acquisition will also be an interesting watch as we find the Bombay House trying to stitch all of its three airlines into one. The integration & synergy is utmost important as with the deal of such magnitude, the last thing Tata would want is letting the schedules overlap. Of the flights in discussion, 121 are operated by Air India, 46 by Air Asia, 42 by Vistara & 13 by Air India Express. With this, the group’s airlines will now cumulatively enjoy a significantly large domestic market share at nearly 25%, second to IndiGo at 60%. Moreover, as there is no bar on a merger with existing operations, the group may bring in one of its old strategic partners in a more serious role as well.
Retaining the Maharaja
Pondering upon Air India as a brand, the name speaks out for itself, loud and clear. The nationalistic touch in the name and now the acquisition by the Tata group brings in trust as a synonym. It would not be surprising if the group continues to revitalize the Maharaja which has grown upon all of us as an iconic symbol. Yes, it would need a new magic touch, but it is not something the brand should part away with.
End Note
My idea for a Tata Airlines in 2021–22 is to build upon, not one, not two but all of its 4 brands. The reimagined entry of a Tata Airlines in 2021–22 indicates a stronger discipline in pricing and contribution to a market which until now dominated by a single private player, IndiGo. The title Air India should be shared with the other group airlines — Air India for international routes, Air India Vistara for domestic full fledged airlines and Air India Express (merged with AirAsia India) as a low-cost domestic carrier. Nevertheless, the utmost important strategic decision on the table is indeed the schedule integration of the 4 carriers.
It will be interesting to watch Tata revamp Air India and bring back the ‘Tata-ness’ in its services. After all, the Maharaja is back!
