The Tata Group, which founded Air India 85 years ago and was then forced to relinquish control, is interested in bidding for the airline put up for sale by the government. If it acquires Air India, it will be 64 years after its nationalisation.
The 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 Inter-national 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 entreprise. 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.
Today, Air India has become a symbol of government’s utter inability to do business. It is saddled with huge debt. The mounting debt is the reason the government wants to exit Air India. The Narendra Modi government has infused nearly Rs 16,000 crore since coming to office in 2014, and the central exchequer is no longer keen on keeping the airline afloat with little sign of a revival.
Will the Tata Group buy Air India for emotional reasons? No. Despite its debt and operational mess, it still has great value. Many even see Its debt being balanced by its reach and spread. It has a fleet of 118 aircraft and flies the highest number of passengers to and from India according to Directorate General of Civil Aviation data. It also has coveted parking slots in airports round the world such as New York, Chicago and London besides 18 morning departure slots in Mumbai alone.
Besides, the carrier is also part of the Star Alliance global grouping. Air India’s domestic market share is 13 per cent and nearly 75 per cent of its capacity is used for international flights.