It's a happy homecoming for Air India as it has returned to where it came from after six decades of the historical and stumbling journey with major setbacks, failures, and turbulence. The skies of independent India had witnessed the dominance of the country's flagship airliner and they will now welcome the beginning of a new era in India's aviation ecosystem. Though the Indian government has lost its signature carrier, it has been relieved from a huge weight that it carried on its back for several decades.
With the fall of Air India, the country would see private players captaining aviation with no government-owned airliner. On one side, it's unfortunate that India, which is one of the world's largest mixed economies with major participation from the government, has no fully government-owned airliner and the state of lack of public infrastructure in aviation has come at a high time of enhancing global connectivity as the major airspaces are being opened after the Covid-19 pandemic shut down with the people expecting affordable flying.
The journey of Air India has major chapters in the book of the journey of Indian Aviation. From being established by aviation pioneer JRD Tata to coming back to his scion, Air India has a historical journey and legacy and it has landed back to its home with a great tag and value in the aviation industry. When it was nationalized after being acquired from JRD Tata, the contingent was at a small scale and when it is delivered back to where it came from, Air India is one of the finest airlines connecting India to major global destinations and having parking lots and support in some of the busiest airports from New York, London, Dubai, to Hong Kong and Singapore. Let's fly across the journey of Air India and its timeline of homecoming after 68 years.
Air India has a rich tradition and heritage which transformed it into a great brand. Jehangir Ratanji Dadabhoy (JRD) Tata founded the airline in 1932 and named it Tata Airlines. The aviation division of Tata Sons was listed as Air India in 1946 while the international arm was launched in 1948 with flights to Europe. According to PTI, the international service was among the first public-private partnerships in India, with the government holding 49 per cent while the Tatas keeping 25 per cent with the public owning the rest.
Air India was nationalized in 1953 and the airliner was unbeatable in the skies for the next four decades, until the emergence of a multi-poly market. As a government-backed carrier, Air India had established to be the pick of Indians to have non-stop journeys across the globe, connecting major continents. During 1994-95, the private players came to the sky and eventually began to fly high than Air India by offering cheaper tickets and connecting more Indian cities. With the emergence of private players, Air India had begun to lose its market share. It had started to brace up the financial crisis by reporting more losses and uncertainities.
As part of its broader privatization and disinvestment push, the NDA regime under Atal Bihari Vajpayee had in 2000-01, tried to sell a minority stake or 40 per cent stake in Air India. However, the government's first attempt to get rid of Air India had met with failure after Singapore Airlines along with the Tata Group, which showed interest in buying the stake, had pulled off from the deal as the sequel of protests from the trade unions, who had strongly opposed privatisation. The deal of selling Air India's stake was taken up by the Congress-led UPA regime and the airliner had started suffering losses every year since its merger with Indian Airlines in 2007-08.
A Turnaround Plan as well as Financial Restructuring Plan were approved for Air India by the previous UPA regime in 2012. When Narendra Modi became the Prime Minister in 2014, his government had boosted Air India's privatization plan as the deal progressed further amid episodes of talks and deliberations. In June 2017, the Cabinet Committee on Economic Affairs (CCEA) had given its principle approval to the consideration for strategic disinvestment of Air India and its five subsidiaries. A panel of ministers was formed exclusively for this disinvestment drive. The deal had culminated further.
In March 2018, the Union government had invited Expression of Interest (EoI) from investors for buying 76 per cent of stake in Air India while the government had proposed to keep the rest 24 per cent in its store. The government had made a deal in a way that the buyer would also get 100 per cent in Air India Express and 50 per cent in the ground handling unit, Air India SATS. The aim was to sell Air India to private instead of putting it into history as the airliner had been reporting a mountain of debts that the government made it up its mind to let it go.
After inviting the EoI, the government had fixed May 14, 2018, as the last date of bidding. The conditions to acquire Air India seemed onerous as the government had said that the buyer must take Rs 33,392 crore or close to 70 per cent of the airliner's debts. The bidding hit the deadline of May 14 with no bids on the table. In January 2020, the government had again unfolded EoI for Air India Privatisation and this time, the government has decided to fully exit Air India by selling 100 per cent. The deal had also included 100 per cent in Air India Express and 50 per cent in ground handling unit Air India SATS. However, no bids were received.
The late date for bidding had extended five times till December 14. According to the EoI, the total debt of Air India was Rs 60,074 crore as of March 31, 2019, and the buyer would be required to absorb Rs 23,286.5 crore. It was a huge part of a debt and it failed to attract any potential buyers. In October 2020, the government had eased the deal and said that the investors can decide on the amount of Air India debt they want to bear. In two months, in December 2020, the Secretary of the Department of Investment and Public Assets Management had said that Air India EoI had received several bids.
In March 2021, the then Union Civil Aviation Minister Hardeep Singh Puri said, "There is no choice, we either privatise or we close the airline. We run a loss of Rs 20 every day despite Air India making money now." The government had begun to invite financial bids for Air India in April 2021 by fixing September 15 as the last date. In September 2021, the Income Tax department had allowed new owners of Air India to carry forward losses and there were two buyers on the race, Tata Sons, the founder of Air India and Ajay Singh, who was the promoter of SpiceJet. The race gave a sign that Tata will win and bring back its airline child to the home.
On Friday- October 8, 2021, the Union government has announced that the Tata group has won the bid of acquiring Air India for Rs 18,000 crore. Air India will be returning to where it came from after 68 years. After winning the bid, Tata Group Chairman Ratan Tata had expressed delight over the takeover. He issued a statement in which he wrote, "The Tata Group winning the bid for Air India is great news! While admittedly it will take considerable effort to rebuild Air India, it will hopefully provide a very strong market opportunity to the Tata group's presence in the Aviation Industry. On an emotional note, Air India, under the leadership of Mr JRD Tata had, at one time, gained the reputation of being one of the most prestigious airlines in the world."
"Tatas will have the opportunity of regaining the image and reputation it enjoyed in earlier years. Mr JRD Tata would have been overjoyed if he was in our midst today. We also need to recognize and thank the government for its recent policy of opening select industries to the private sector. Welcome back, Air India!", Ratan Tata added. During the briefing on Friday concerning the budding, Tuhin Kanta Pandey of the Department of Investment and Public Asset Management has said that the government aims to complete the transaction by the end of 2021.
As the Tata group will retain all employees for the period of one year, they will be offered VRS by the company, if they weren't retained in the second year. As a part of the conditions from the Union government for accepting the deal, Pandey said that the Tata Group cannot transfer the Air India brand or logo for at least five years. On the front of finalizing the bid, Pandey said that a group of ministers comprising of Union Home Minister Amit Shah, Union Finance Minister Nirmala Sitharaman, Commerce Minister Piyush Goyal, and Civil Aviation Minister Jyotiraditya Scindia had cleared the winning bid for Air India on October 4.