Tata Group May Buy 51% Stake In Air India; 3 Reasons It Will Be A Masterstroke From Rata Tata

Air Inda going back to Tata Group?
Air Inda going back to Tata Group?

Very strong rumors are in that Tata Group may acquire a majority stake in Air India, by buying 51% of the India’s national air-carrier.

Note here, that it was Tata Group which founded Air India, 85 years ago, and then was forced to give the control to Indian Govt. after independence.

If this deal materializes, then it shall be the true ‘Ghar Wapasi’  for Air India, albeit after a gap of 85 years.

As we all know, automobiles and aircrafts are Ratan Tata’s passion, and considering the rough patch which Air India is going through right now, this can be a master-stroke from the Tata Group.

Will Air India Go Back To Tata Group?

As per reports coming in, Tata Sons chairman N Chandrasekaran has held multiple meetings with Civil Aviation Ministry, regarding a possible buy-out of Air India.

The arrangement by Tata Group has been made so as to acquire 51% of Air India by cash and equity, which suits well for the Indian Govt. as well, which wants an Indian company to hold majority stake of India’s national air-carrier.

As per speculations, the rest of the 49% may be acquired by Singapore Airlines, which is already in partnership with Tata Group for running Air Vistara Airlines.

This is part of PM Modi’s push for fully privatising Air India, and if Tata Group is interested in this, then it shall be good for all the parties.

However, at this point of time, Tata Group has refused to acknowledge this development. In a statement, they said, “We do not comment on such matters..”.

3 Reasons It Shall Be A Masterstroke From Ratan Tata

a) As per data from Directorate General of Civil Aviation, Air India flies highest number of passengers from and to India, and it has a fleet of 118 aircrafts, which makes it a solid investment. It has got some crucial parking slots across the main airports of the world, which includes New York, London and Hong Kong, in Mumbai alone, they have access to 18 departure slots, the highest in the country. If Tata Group wants to establish a solid presence in the aviation market, then nothing beats Air India acquisition. A person close to this development said, “You sign the cheque and from the very next day imagine the clout you have in the subcontinent, deep into Europe and the US.”

b) Air India’s domestic market share is 14%, and along with Air Vistara, it may emerge as the biggest airlines of India, if the deal goes through. Almost 75% capacity of their international flights are occupied, daily, and this means that Tata along with Singapore Airlines can become a major player of this niche. Air India is also part of Star Alliance global grouping.

c) This is the right moment for acquisition of Air India, considering the mammoth debt of Rs 55,000-Rs 60,000 debt, which is currently issuing trouble for all. PM Modi Govt. has already infused Rs 16,000 crore into Air India, and the Govt. is in no mood to give more money. Interestingly, Tata Group had initiated a buyout of Air India in 2000, to acquire 40% stake, along with Singapore Airlines, which was refused. Again in 2013, Ratan Tata showed interest in acquiring Air India, if its privatized. Now, it seems, is the right time for Air India to make the sale, and go back to the business group which had founded it in 1932.

Do you think that Rata Tata and Tata Group would prove to be a good master of Air India? Can it change Indian aviation industry? Do let us know by commenting right here..

Cover Image Source: airindiacollector.com/jrd-tata-gallery.html

  1. Bharat Kumar says

    It will be a good thing, though anti-climatic. One wonders why the government dragged its feet on this issue for so long. The only plausible explanation is that the employees and the bureaucrats along with parliamentarians would lose their free rides and perks. It took a slap and a shove for the government to realize that flying means different things to different people – some think they can let their tongues and hands can fly !

    Tatas in the past had taken over VSNL, now Tata Communications. Now they must take over BSNL too and reduce the government’s anxiety a bit. But that would mean more perks will disappear. Free telephone connections, mobile data, etc. So what will be the incentive for the sarkari karmacharis – maybe an eighth pay commission to compensate.

    Just curious why no other industrial house, provides a comfort level to the government. Is that because Tatas are trustworthy, honest (except for a Radia here and there) or because they indulge the bureaucrats and also do some work?

    1. Poonam Lal says

      Good analysis.

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