Air India lands on the “Old Address”

 


TATA Group recently acquired 100% ownership of Air India for ₹18,000 crores after 68 years, on 8th October, 2021 by outbidding SpiceJet. As soon as the news was broadcasted, a buzz was created all around as the netizens expressed their joy over TATA Group winning the Air India bid. Despite many being overfilled with delight and congratulating the Indian multinational conglomerate for bringing the Maharaja home, very few know about the past of Air India.

Air India was originally founded by JRD Tata in 1932 as ‘TATA Airlines’. The beginning of this airline was very interesting as this airline wasn't meant for traveling people but to carry messages. Since, at that time, India and Pakistan were not separated, the route chosen by them included Karachi, Mumbai, and Madras. The airlines were known for their unmatchable quality. Despite British Airlines and the Britishers having a huge capital all over the world, the quality of TATA Airlines impressed the people a lot. In the 1930s, the Civil Aviation Department also praised Tata Airlines for being the only airline working with 100% punctuality.

By 1946, TATA Airlines started passenger traveling as well. It started earning a huge amount of profits. However, post-1947, the government acquired 49% of the stakes of the company under public-private partnership and renamed it "Air India". Soon the government bought 2% more of the stakes of the company as a part of the country's nationalisation policy and became the major stakeholder with 51% of the stakes. The government also merged various domestic airlines and formed the Indian Airlines which started operating alongside Air India. This was the emergence of the twisty turvy ride of Air India.

In 1991, several economic reforms were introduced in India. India got liberalised as per the country's new economic policy. Many private players entered the airline industry and started providing much cheaper tickets. In 2003, Deccan airlines entered the Indian market and became India's first low-cost carrier. Go Air, SpiceJet, and IndiGo airlines also started earning higher profits while Air India couldn't compete with them and continuously slipped from the market share. At the same time, the number of planes and employees after the merger of Air India and Indian Airlines went so high, that their losses grew higher than their daily operations.

 


Air India, crippled with ₹40,000 crore debts, turned into a loss-making asset for the government who began trying to sell it off in 2018, however, no one was willing to buy it because of its substandard condition. In order to sell it off this time, the government issued a fresh tender offering a 100% stake in Air India.

As a result, Ajay Singh-led SpiceJet and Ratan Tata-led Tata Sons showed their interest in the deal. Finally, the TATA Group won the bid and regained control of its own launched Air India with a promise of reviving the lost glory of Air India.

According to the deal, losses and debts of Air India amounting to ₹46,262 crore will be cleared up by the government and the remaining losses of ₹15,300 crore will be absorbed by the TATA Group. TATA Group has also given ₹18,000 crore to the government for transferring the assets.

Every sunset brings the promise of a new dawn. A new dawn has arrived for Air India as for the next 5 years, TATA will own this brand and rebuild what once was the pride of India. But will it be able to turn around Air India and ensure its survival in the competitive airline industry?

Khushi Joshi
B.Com (P)
Second Year

Comments

  1. crazyhelga25 October 2021 at 23:30

    outstanding.

    ReplyDelete
  2. Ankit Sharma25 October 2021 at 23:48

    Very informative and interesting blog about "homecoming" of Air India. Congratulations 👏🎉

    ReplyDelete
  3. Unknown25 October 2021 at 23:49

    This comment has been removed by the author.

    ReplyDelete
  4. Unknown26 October 2021 at 00:50

    Beautiful explained
    Very informative

    ReplyDelete

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