Published: 09th October 2021
What The FAQ: Why Air India's acquisition by the Tata Group could make for a decent Bollywood script
It's a "sweet" homecoming for Air India as Tata Group wins bid for the airline. Here's all the history you need to be up to speed with on the issue
The privatisation of certain industries, which is in full swing under the Modi government saw it selling the loss-making Air India to the Tata Group. Apart from the number-crunching on this significant deal, there is also the question of whether the actual founders of the airlines will be able to restore the prestige it once had. We look at Air India's journey through the years.
Why is it a homecoming?
JRD Tata's obsession with flying is the origin story behind Air India. In 1932, it took the industrialist Rs 2 lakh to set up the Tata Aviation Service. Air India was back then called Tata Air Mail, and he was incidentally the first person to pilot an Air India flight. By 1937, Air India was pulling a profit of around Rs 6 lakh. It was only after Independence that Air India was rehashed as a public airline. The government came to own 49 per cent of the stakes, and the Tata group owned just 25 per cent. By 1953, the government had bought all of the stocks in Air India and other domestic airlines, and aviation was officially a nationalised sector. Even after the acquisition, the Tatas remained on the board of directors of Air India up until 1989.
Why did the government decide to sell it now?
The Modi government's strategy is exactly opposite to the Nehru government's in the post-Independence era. Air India as a nationalised entity has never reported a profit since 2007, when the government merged it with Indian Airlines, and has thrust upon the government debt of Rupees 61,562 crore. However, the government has been trying to sell at least a part of its stake since as far back as 2001.
What are the terms of the current deal?
The Tatas have acquired not just Air India, and its subsidiary Air India Express, but also a portion of its debt to the tune of Rupees 15,000 crore. They acquired a 100 per cent stake in the airlines at the price of Rs 18,000 crore. Incidentally, when AI was bought by the Indian government, the Tata group has received Rs 2.8 crores. Air India has 117 aircraft. The Tata Group is also required to retain Air India and roughly 14,000 employees of the company and its subsidiaries for around a period of one year.