Pioneer industrialist, J.R.D. Tata founded ‘Tata Airlines’ in India in 1932, which was nationalized in 1946, and renamed Air India (AI). Following an interesting turn of events, after 88 years of its founding, the struggling national carrier is supposedly on its way back to the home team, with the Tata Group moving very close to make a bid for the carrier. After the Indian government opened the bid to sell off the flag bearer last month, many entities including Indigo Airlines, the Hinduja Group and Tata Group, among others, have shown interest in AI. However, as per reports, the Tatas, in partnership with Singapore Airlines (SIA) are the closest among all bidders to acquire the carrier.
The Tata group, in partnership with SIA, also owns Vistara Airways. The two groups working together have shown competency in managing and thriving an airline in the ever-so-difficult Indian aviation market. Reports suggest that the two have already started working on the structure for an acquisition, which also includes merger of the subsidiary of Air India, Air India Express (IX) with Air Asia India. The Tata Group owns 51% stake in Air Asia India, with its remaining 49% being owned by the Malaysian Air Asia Limited. The Tata Group is said to have approached Tony Fernandes, the Founder of Air Asia Limited, for his approval on the merger with IX.
Air India Express Boeing 737-800. Image Credits: Gulf Business
The deal is supposedly worked such that the merger of LCCs (IX and Air Asia India) will be managed together by Tatas and Air Asia Limited, whereas Air India and Vistara Airways shall remain under the control of Tata and SIA Group. Thereby, if the Tatas do go ahead with the deal to acquire AI, that would pretty much grant them monopoly in Indian Aviation market!
The last date to submit an Expression of Interest for Air India is March 17, 2020. While no formal statement regarding this deal has been released by the Tatas, it is well understood through numerous sources that the Tata Group is thoroughly pushing for this acquisition. We will have to wait and see, till the government releases the list of entities in March end as to how this deal progresses.
What do you think of this deal? Will Tata acquire AI? Remember that if AI goes unsold, it might be shut down. It is more of a debate of whether the Tatas need AI to dominate Indian Aviation market, or whether AI needs Tata to stay afloat? Let us know in the comments!