After 68 years, Air India is now ready to come back to the Tata portfolio. Tata Sons subsidiary Talace Pvt Ltd appeared as the champion bidder for the debt-laden nationwide carrier after pricing an enterprise value of ₹18,000 crores. The government will take a hit of ₹28,844 crores.
The Tatas will hold a 100% stake in Air India, 100% in its low-cost international division Air India Express and 50% in the ground managing joint venture, Air India SATS. Apart from 141 aeroplanes and admittance to a network of 173 destinations, including 55 international ones, Tatas will also have the ownership of iconic brands like Air India, Indian Airlines and the Maharajah.
— Tata Group (@TataCompanies) October 8, 2021
The Birth of Air India – Journey of Tata’s First Aviation Company
JRD Tata spent his childhood in France in the neighbourhood of Louis Blériot, the first person to try an international overseas flight in 1907 when he crossed the English Channel in a single-seater aeroplane.
According to JRD Tata’s biographer RM Lala, twenty years later, he sketched Charles Lindbergh, who had flown solo across the Atlantic in 1927. This was when JRD Tata’s attraction for flying took firm roots.
When Flying Club was started in Mumbai (formerly Bombay) in 1929, JRD Tata registered and logged long hours to understand the art and science of flying aircraft. Three years ahead, JRD Tata established Tata Aviation Service in 1932 with an expenditure of Rs 2 lakh and led the first flight of Air India, then named Tata Air Mail.
It was a cargo aviation. It soon matured into a profit-making venture. In five years, Tata Air Mail’s profit grew from Rs 60,000 in 1933 to Rs 6 lakh in 1937.
Tata changed the brand name to Tata Airlines in 1938. When World War II broke out, the British Indian government confiscated all the Tata Airlines’ aircraft back then. Before that, Tata had begun having issues with the government in managing the airlines business.
After World War II stopped and Tata received back administration of the aircraft, JRD Tata renamed the airlines as Air India in 1946 and went public as a joint-stock company.
The independence of India changed Tata’s relationship with the government. Tata Group, in October 1947, gave an offer to the government to float Air-India International.
Next year, Air India started its maiden international circuit with a Bombay-London flight. It was on this flight that its iconic mascot Maharaja was practised.
The end of World War II had made it evident that the British control of India was a matter of time. By 1946, there were hearsays of the nationalisation of privately controlled airlines in India.
JRD; Jehangir Ratanji Dadabhoy Tata had, however, dismissed the speculation in his interview to the Associated Press, stating, “There is an overwhelming case against the nationalisation of Indian airlines.”
However, five years after Tata let the government own a 49 per cent stake, the Nehru government decided to nationalise Air India. JRD Tata was taken by surprise and was “indignant at how the government had treated the air transport industry”.
Despite the nationalisation of Air India, JRD Tata continued the national carrier’s chairmanship for around 25 years. He was dismissed from the position in 1978.
When Indira Gandhi came back to leadership in 1980, she carried back JRD Tata to the Air India’s board of directors. He continued to hold the position till 1986, when Prime Minister Rajiv Gandhi designated Ratan Tata as the Air India chairman. Ratan Tata continued on the chair till 1989.
After India expanded its economy at the beginning 1990s, Tatas set up a joint venture with Singapore Airlines, which collapsed initially. Still, in 2012, the two groups came collectively to start a domestic airline, the Vistara Airlines.
This winning bid also brings to Tatas part of Air India’s debt. The government announced as, on August 31, Air India has a total debt of Rs 61,562 crore. Tata takes over Rs 15,300 crore of the debt. The rest would be transferred to a special purpose vehicle (SPV).
What will happen to Air India Staff? What about the Maharaja logo?
There will be no limitation on Tata Sons about the future merger, the finance ministry declared.
The current workers of Air India will be retained for one year. There will be no sacking, the ministry told.
The winning bidder has to hold and maintain all employees of Air India for one year. If the new bidder sacks anyone in the second year, they will have to be paid VRS. Along with that, all employees will get gratuity and provident fund and post-retirement medical benefits.
This one-year security for employees is not absolute. There are concerns like performance, conduct etc. Air India currently has 12,085 employees, including 8,084 permanent representatives. Air India Express, on the other hand, has 1,434 employees.
Ratan Tata on Friday greeted Air India in his company’s fold and announced the airline provides a complete market opening to the group even though it will take essential effort to rebuild the debt-laden carrier. “While admittedly it will take considerable effort to rebuild Air India, it will hopefully provide a solid market opportunity to the Tata Group’s presence in the aviation industry,” he stated.
‘Welcome back Air India’: Ratan Tata reacts to the news
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Know About Tata Sons’ Subsidiary: Talace Private Limited, Which Has Bought Air India
Talace Private Limited is a separate limited company that was founded recently on 12 August 2020. The company is listed at the Registrar of Companies in Mumbai and has an authorised share capital of Rs. 502,500,000, according to reports. It also reportedly has a paid-up capital, summing up to Rs. 252,000,000. Directors of Talace Private Limited are Eruch Noshir Kapadia, Saurabh Mahesh Agrawal and Nipun Aggarwal.
“Reset”: What Anand Mahindra Shared On Tata Sons Winning Air India Bid
Industrialist Anand Mahindra has embraced the government’s decision of Tata Sons winning the bid for Air India, stating the disinvestment of the national carrier amounts to a “reset” of the Indian business ecosystem.
Anand Mahindra said that with this move, the government is dispensing of a cash drain and rebuilding its belief in the private sector.
I may be accused of overstating the importance of this event but I think this divestment amounts to a ‘reset’ of the Indian business environment. Yes, the Govt. is dispensing of a cash drain; But it’s also renewing faith-after decades-in the potential efficiency of the Pvt.sector https://t.co/iZKgt2L7cD
— anand mahindra (@anandmahindra) October 8, 2021
For Tata Sons, Air India unites a third airline brand to its firm and gives it access to more than a hundred planes, thousands of qualified pilots and crew, and lucrative landing and parking slots all around the globe.