The government has not yet announced formally the sale of its white elephant Air India to Tata Sons which together with Ajay Singh the promoter of Spicejet remains the two serious bidders and contenders. The national carrier is steeped in a massive debt of the order of Rs 70,000 crore and piling up a daily operational loss of Rs 20 crore.
Reports say Tata Sons is willing to takeover 15 percent of the debts along with the airline assets.
While its monumental debts were a put-off for the bidders in the earlier futile attempts at discovering an eligible suitor, Air India's assets and rights---more than 4,400 domestic and 1,800 international landing and parking slots at domestic airports, and 900 slots overseas and a fleet of 172 aircrafts with 87 of them being owned---are the main attractions for a strategic buyer. The winning bidder will not only hold 100 per cent stake in Air India and its low-cost arm- Air India Express, but also a 50 per cent stake in ground handling company Air India SATS Airport Services Private Limited (AISATS).
Air India’s real estate, which once was touted to be possible attractions for suitors, have been ringfenced and are being sold separately.
Tatas already have presence in the domestic skies with their Vistara and AirAsia airlines. Hopefully it would make Air India (rechristened back to Tata Airlines?) its international arm, where it has plenty of scope especially from Indian travelers who perforce have to take a detour for their European and US destinations via Dubai (Emirates) or Doha (Qatar Airways) or Abu Dhabi (Ethihad).
The Middle East and Gulf nations have an inherent advantage---cheap aviation fuel which makes them ideal refueling stations in addition to making their airlines price competitive. Tatas may have to surmount many difficulties, including prevailing upon the government to rationalize the fuel tax, and slug it out with its competitors through innovative business practices. The domestic market is amenable to low-cost and no-frills flying, but long international flights are a different kettle of fish.
The annual report of the Directorate of Civil Aviation (DCA) of India for 1933-34 commends the efficiency of the airmail service Tata Airlines was operating between Karachi and Bombay, particularly for its 100 per cent punctuality even in rain storms and over difficult terrains. It even suggests that staff from Imperial Airways be deputed to Tatas “to see how it is done”. That was the salad days of Tata Airlines.
The aviation sky has become a lot more crowded now and hence punctuality is not always in the hands of an airline. Yet, it is something worth aspiring to along with an efficient fleet utilization so that no aircraft remains in the hangar unnecessarily.
Free of political meddling
It would be free of political meddling--that was the bane of Air India. Bulk acquisition of aircrafts result in blocking capital and incurring unnecessary overheads. In sharp contrast, phased deliveries at pre-agreed prices negotiated by Indigo would hopefully not be repeated by Tatas. It must, however, be conceded that Tatas themselves were singed when winner’s curse came to haunt them soon after acquisition of the Anglo-Dutch steel major Corus at an exorbitant price. Since the sale itself (of Air India) has not been announced formally, the minutiae are anybody’s guess. Whether the entire bloated staff would be absorbed by Tatas remains in the realm of speculation.
The then Prime Minister Jawaharlal Nehru committed a blunder by nationalizing Air India in 1952 on the woolly and irrational ground that the crucial transport sector must be state-owned. The Janata government which came to power in 1977 post-Emergency rubbed salt on Tata wounds by unceremoniously throwing out JRD Tata from the ornamental post of Chairman. The Modi government would be rectifying,yet another historical wrong, if and when it hands back the reins of Air India to Tatas. Tatas have a point to prove and a reputation to redeem, too.
(The author is a senior columnist and tweets @smurlidharan)
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