Tata buying AIR India will be a move to go down in history. Originally the idea of aviation in India was JRD Tata’s plan. The company managed to realize the idea in 1932 with the launch of Tata Airlines. But soon the government took over the airlines and thus AIR India was born in 1953. In 2013, Ratan Tata said that the company would be happy to look at the national carrier if one day it was put up for divestment. A good 16 years ago the group had shown significant interest in AIR India when the government had decided to sell 40% of the carrier. But the NDA government soon decided against their choice to sell.
The current situation is absolutely tricky for the Tata group. The government has been airy regarding its suggestion to the Tata group to buy the airline. N Chandrasekarnan, the Chairman of Tata group reportedly had a meeting with Arun Jaitley, the Union Minister and Ashok Gajapathi Raju, the Civil Aviation Minister in New Delhi regarding the said matter. The government is still deciding as to go for a partial divestment or a complete sale of the airline. The group isn’t willing to buy the airline if the government doesn’t reduce its debt of Rs.50,000 crores and beyond.
And why not? Tata are in great mess themselves right now financially as AirAsia India suffered a loss of Rs. 133 crores on revenues of Rs. 159 crores in 2015 and another venture called Vistara reported a loss of Rs.401 crore on revenues of Rs. 715 crores in 2016. The buyback of AI would only enhance the wounds for the group.
The plus points? Tata and Singapore Airlines together is planning to start international flights for Vistara next year and the groups require wide-body planes to be able to do that. If AI becomes a part of the Tata family then Vistara could fly international using the national carries overseas network and fleet.