In the highly competitive Indian aviation market, Air India, the country’s flag carrier, has long been struggling. The ‘Maharajah’ is beset with a debt of over Rs 52,000 crore and has been teetering on a bailout package that was extended by the government in 2012. Over the last two decades, calls for partial or complete privatisation of the airline have often risen although no substantive solution was ever found.
Earlier this month, Finance Minister Arun Jaitley, in surprising remarks, said in an interview that he would sell the airline completely if given a choice. “Air India can continue to be a national carrier and somebody else pay for its management,” he told ET Now.
Now, reports are emerging yet again that the Tata Group, one of the country’s biggest conglomerates, is holding discussions with government representatives about buying a stake in the beleaguered airline. The company, of course, hasn’t confirmed the speculations but if true, we may be looking at the national airline making a return to its place of birth.
Air India, before its nationalisation, used to be known as Tata Airlines having been founded by former chairman of Tata Group, JRD Tata in 1932. Tata, right from his childhood, was passionate about flying through his association with the family of Louis Bleriot, a French aviator, and got his first shot to ride in an aircraft in 1919 when he was just 15 years old. His aviation ambitions came true 10 years later in 1929 when he became the first man in India to get a commercial pilot’s license. Three years later, Tata Airlines was born with an initial investment of Rs 2 lakh from Tata Sons and two second-hand de Havilland Puss Moths. In the autumn of 1932, in India’s inaugural flight, Tata himself piloted a single-engine plane carrying 25 kilograms of mail from Karachi to Bombay. The mail used to come to Karachi from England by the Imperial Airways.
In subsequent years, Tata Airlines also ran commercial operations apart from the usual mail deliveries, often making stops between Mumbai and Trivandrum and then later to Delhi, Gwalior and Bhopal. Six years after its birth, Colombo became the airline’s first international destination charting a growth map few airlines were able to match within such a short span of time. It also conducted several trips during the Second World War carrying refugees from Burma and constantly engaged in the maintenance of RAF equipment.
In 1946, Tata Airlines was re-christened Air India Ltd after it became a joint stock company and opened its office on the second floor of the head office of Tata Group. While relations between the government and the company were initially smooth post-independence, rumours soon began to swirl of the airline along with a host of other companies being considered for nationalisation, a proposition JRD was not comfortable with.
“J.R.D objected at once: If nationalisation could be shown to be in the public interest, he said, then he would be entirely in favour. But there was no evidence that this would be the case. India’s new government had no experience in running airlines and, particularly in so far as passenger safety was concerned, it was vital that management stayed in experienced hands,” Morgen Witzel, a Canadian author, writes in his book ‘Tata: The Evolution of a Corporate Brand.’
The government’s defence was that there was a need for order and rationalisation in the industry as carriers were quickly going bankrupt.
“JRD’s counter arguments were in vain. By 1953, the decision had been made,” Witzel writes. Air India was nationalised.
However, JRD stayed on as chairman at the request of then prime minister Jawaharlal Nehru and continued in that position for 25 years until he was sacked in 1977 by then prime minister Morarji Desai. This is widely considered a period in which the airline was at the height of its glory quickly expanding to Europe and Africa and offering finest airline services for domestic and international passengers.
“He saw to it that standards were not compromised; the airline’s safety record and its reputation among Indian and international passengers were both excellent,” Witzel wrote. Air India’s monopoly over Indian skies was absolute according to the Air Corporations Act, 1953 as private operations were not allowed to fly. That practice ended in 1994 when the Act was repealed and private airlines came into the picture.
But over the years, Air India accumulated mounting debt through the 90s and 2000s with government apathy, the merger with Indian Airlines and its patronage of politicians and parliamentarians often cited as reasons. Today, the airline is in third spot in terms of domestic market share behind IndiGo and Jet Airways.
In 2015, Tata Group, after several decades, re-engaged with the Indian aviation market when it launched an airline, Vistara, in conjunction with Singapore Airlines. It operates to 20 destinations within India at the moment.
Now with speculations that Tata Group will participate in Air India’s privatisation process, there is renewed interest in the industry about curtailing the airline’s losses and setting it on the right path. After all, who understands Air India better than the Tatas is the popular sentiment.