Air India’s Fate to Be Sealed by Mid 2021

by Ajay Prakash
Air India Aircraft

Air India, India’s national flag carrier, has a checkered history. Air India’s origins were in Tata Airlines, a company owned by Tata Sons Limited. The company was formed in 1928 by the JRD Tata, a passionate aviator, a business tycoon, and the Tata conglomerate head.

Tata Airlines was renamed Air India on July 29, 1946, with the government acquiring 49% of the shares. In 1953, the government of India passed the Air Companies Act under which the airline was nationalized. The government acquired a majority stake, but JRD Tata continues as its Chairman till 1977.

Air India Express

Air India Express B787

Air India Express – The lost airline. Photo Credit: Wikimedia Commons

Air India attempted to take on low-cost airlines by creating another company – Air India Express. Air India Express came into existence on April 29, 2005, primarily to regain Air India’s share on the lucrative India-Gulf route. The airline is still operational and has been profitable from 2016 onwards.

Other Entities

There are other companies under the Air India group. There is AI Singapore Terminal Services Ltd (AISATS), the ground handling company joint venture in which Air India has a 50% stake.

Air India has interests in the following companies too –

i. Air India Engineering Services
ii. Air India Air Transport Services
iii. Airline Allied Services and Hotel Corporation of India
iv. Alliance Air

Alliance Air is not up for sale. The remaining companies are in the process of being transferred to a separate entity. Some of these companies are profit-making.

Companies Under Disinvestment

Air India’s Disinvestment Plan

Shortlisted Bidders

Earlier this month, the government announced that Tata Sons Limited and SpiceJet had been selected for the next round of bidding.

According to Hardeep Singh Puri, the Civil Aviation Minister –

We are looking at another timeline now, what is called data room for prospective bidders to look at… that is opened up, 64 days for the financial bids to come in. After that, it is the question of taking a decision and handing over the airline.”

The government is keen to wrap up the sale quickly and is looking at concluding the process by June – July this year. If Tata Sons succeed in bidding for Air India, the airline would have come back to them after 75 years – completing a full circle. However, the issues are complicated, and how far the government will succeed in this ambitious sale is something that we will keenly follow.

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