In the Indian aviation sector, the most talked-about matter for the past couple of years is the disinvestment of state-owned Air India, which is sitting on massive debt.
In this seemingly never-ending process, with many possible contenders for Air India, India’s Tata Group has once again emerged as a possible buyer for Air India. While the business conglomerate has not officially confirmed this, the rumour mills and aviation experts seem to indicate that Tata Group is indeed evaluating bids for the debt-ridden national carrier. If this situation were to come true, this would mean that Air India would go back into the hands of the group that founded it in the same place. Air India was founded by the Tata Group 87 years ago and run until the Indian government acquired 49 per cent stake in 1948.
Interesting to note, that if Air India does go back into the Tata fold, it will be the latter’s third airline following Air Asia and Vistara, which is a joint venture with Singapore Airlines. In addition, we know for sure that the government has expressed a desire to exit Air India entirely and not retain a minority stake, as it had said much earlier. Tata Sons had expressed interest in the national carrier previously, however, the discussion hit a stalemate as the conditions were not acceptable to the group.
Tata Group chairman N Chandrasekaran told Times of India recently, “I will ask the team to evaluate it. Ideally, it should be a Vistara decision, not a Tata Sons decision. I am not going to run a third airline (in addition to Vistara and Air Asia) unless we merge. There are issues. I will never say yes or no. I don’t know.”
If Tata were indeed to buy Air India, Indian aviation history would come full circle, and Air India would be reacquired six decades after it was nationalised. This move would help Tata Group consolidate its presence in the Indian market and the Air India-Vistara-Air Asia trio would be much more capable to take on the aggressive competition in the market currently. This could also help Vistara’s market presence of 6 per cent, underpinned by Air India’s current market share of 12 per cent. Given that Air India already has an impressive fleet of wide-body jets, and loads of existing international flight slots, Vistara would stand to gain a lot.
How this pans out remains to be seen.