“I will ask the team to evaluate it,” Tata Sons Chairman N Chandrasekaran told TOI in the course of an interview about his plans for the group as well as his recently-released book, Bridgital Nation. “Ideally it should be a Vistara decision, not a Tata Sons decision,” Chandrasekaran said before adding, “I’m not going to run a third airline (in addition to Vistara and AirAsia). Unless we merge. There are issues. I will never say yes or no. I don’t know.”
The government has in recent months indicated its willingness to exit Air India completely, as opposed to its earlier plan of retaining a minority 24%. It drew a blank in its earlier attempt last year to disinvest 76% in AI; the Tatas didn’t show any interest because the terms were onerous, besides which the conglomerate was evaluating the purchase of Jet Airways.
Acquisition of Air India would help the Tatas scale their aviation business. The group has two joint ventures—one a full-service airline with Singapore Airlines (SIA) to operate Vistara, and a second with budget carrier AirAsia. Combined, they made a loss of over Rs 1,500 crore in fiscal 2019.
There is a sense that unlike Jet Airways, Ratan Tata, chairman emeritus of Tata Sons and head of Tata Trusts, might be favourably disposed towards the acquisition of Air India, which his predecessor JRD Tata founded in 1932. Air India would help Vistara grow internationally. Currently, Vistara flies to just four international destinations. Air India would also augment Vistara’s domestic market share, which presently stands at 6%, with its 12% presence.
If it acquires Air India, it will be 66 years after its nationalisation.
History will come full circle with the move, underlining not only the sorry fate of government-owned enterprises but also how India’s indigenous business groups refused to fade out even after decades of socialist policies.
Tata Sons set up Tata Airlines in 1932. JRD Tata, the legendary entrepreneur, himself flew the first flight between Karachi and Bombay. In 1946, Tata Airlines became a public company and was renamed Air India.
Flying was a passion with JRD Tata. He was the first person to qualify within India to fly, according to the company website. “He got his licence, which bore on it Number 1, on 10 February 1929. As an aviator and pioneer flier, he was the one who brought commercial aviation to India. JRD went on to establish Air-India International in 1948 and became the president of International Air Transport Association (IATA) within 10 years of its establishment. He remained at the helm of Air India till 1978, making it one of the most efficient airlines in the world,” the website says.
In 1953, when the government nationalised Air India “through the back door”, as Tata himself put it, it was one of the best airlines in the world. A dream enterprise of Tata, he had built it bit by bit with personal care, down to the menu and curtains. Tata was devastated when he came to know about the decision of then prime minister Jawaharlal Nehru, a Fabian socialist averse to private enterprise. Tata wrote to Nehru: “I can only deplore that so vital a step should have been taken without giving us a proper hearing.”
Tata accepted to become the nationalised airline’s chairman. Air India kept on doing well under him till he was removed in 1977 by then prime minister Morarji Desai.
The airline clocked consolidated revenues in excess of Rs 27,000 crore in 2017-18, with a loss of Rs 5,799 crore. Finance or interest charges exceeded Rs 4,000 crore in that period. Consolidated debt on the books now stands at Rs 58,000 crore. Earlier this month, fuel suppliers led by Indian Oil Corporation had threatened to pull the plug, discontinuing supplies at half a dozen airports. On efficiency parameters too, Air India is a laggard. The airline lags behind most Indian domestic airlines when compared on the basis of their cancellations (2.6%), on-time performance (53.5%) or airline load factor (80.9%). In mid-2018, the NDA government had tried to divest a 76% stake in the airline.