Air India’s sale is a boost for PM Narendra Modi, but can Tata turn around the airline?
- The carrier has been losing US$1 billion a year, and is reliant on taxpayers to stay aloft. Its sale to salt-to-software group Tata is a boost for New Delhi
- But now begins the hard work of reviving an airline – started by J.R.D. Tata before being nationalised – that was once a model for Singapore and Malaysia
Then, it will be up to Tata – which owns luxury British carmaker Jaguar Land Rover – to begin the hard work: reviving the fortunes of an airline that has not reported a profit since a botched 2007 merger with state-owned Indian Airlines and an expensive fleet expansion. Air India has since been relying on taxpayers’ money to keep flying, amid increasingly fierce competition from private carriers.
Of various suitors, only Tata, with its deep pockets and takeover experience, was judged up to the task of nursing Air India back to health.
“This isn’t going to be a quick turnaround,” said Kapil Kaul, CEO of aviation consultancy CAPA South Asia. “The road will be complex and long but the Tatas will bring in patient capital and world-class expertise to make this work.”
The acquisition of full-service carrier Air India and its low-cost subsidiary Air India Express adds a third airline to the Tata hangar and cements a domestic aviation presence for an empire that already spans nearly 100 companies, including India’s largest carmaker and private steel company.
Tata also holds a majority stake in full-service Vistara – a joint venture with Singapore Airlines – and an 84 per cent interest in budget flier AirAsia India, which respectively have 8.3 per cent and 5.2 per cent of the Indian market.