Is Air India going to be privatized?


22 Jun 2017

Is Tata going to take over Air India?

The Centre is reportedly inquiring whether the Tata Group is interested in buying state-owned Air India of which the latter is the original promoter.

Tata Group Chairman N Chandrasekaran also met with Finance Minister Arun Jaitley and Civil Aviation Minister Ashok Gajapathi Raju recently.

Their informal meeting triggered speculation about the largest Indian conglomerate renewing interest in acquiring the ailing carrier.

Air India

Partial divestment or complete sale?

Partial divestment or complete sale?

The Tata Group-Centre's informal talks signaled Tatas' interest to buy 51% in Air India.

Centre is debating whether to go for a partial divestment or complete sale of the national carrier.

Jaitley said private airlines are handling over 85% of flying, they could even handle 100%.

The $104bn Tata Group isn't keen about Air India unless the Centre reduces its ove Rs. 50,000cr debt.

The Tatas

Return to the original owner?

If the Tatas acquire Air India, it will return to its original owner.

In 1932, JRD Tata pioneered aviation in India with Tata Airlines, which became Air India in 1946; it was nationalized in 1953.

Air India always remained dear to former Group Chairman Ratan Tata.

In 2013, he reiterated he would be happy to look at Air India if put up for divestment.

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Ratan Tata's interest in Air India

In 2001, the Tata Group, under Ratan Tata, and Singapore Airlines (Tata's current partner) showed interest in Air India when the then Vajpayee-led NDA government decided to sell 40% in the national carrier. However, the government subsequently called off the divestment move.

Aviation Sector

Tata Group in the flying space

Tata Group operates two joint airline ventures in India: AirAsia India (in partnership with Malaysia's AirAsia) and Vistara (in alliance with Singapore Airlines).

Tata Sons holds 40% in AirAsia India and 51% in Vistara, which reported losses of Rs. 133cr (2015) and Rs. 401cr (2016), respectively.

Acquiring Air India could stretch the conglomerate's resources thin and swell its debt which stands at $26bn.


Plans for Vistara to fly international

Tata and Singapore Airlines are planning to start international flights for Vistara in 2016.

To fly international, Vistara requires wide-body planes and it hasn't placed the order so far.

If Tata were to buy into Air India, Vistara could fly using the former's international fleet and network.

The national carrier has a market share of 17% in international traffic to and from India.

Tatas and Singapore Airlines can improve Air India

An aviation industry official said: "In terms of passengers' perception, the problem with Air India is with the soft infrastructure -in-flight service, cabin cleanliness, amenities, in-flight entertainment- and not hardware, which is aircraft. The Tatas can improve overall passenger experience with Singapore Airlines' assistance."

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