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Explained: What happens after the Tata Group gets control of Air India today?

The Tata Group takes over Air India today. What does the formal handing over mean? What will happen now? What changes for the ordinary flyer? What does the Tata Group gain with having Air India under its umbrella?

Written by Pranav Mukul , Edited by Explained Desk | New Delhi |
Updated: January 28, 2022 12:59:14 pm
The Tata Group placed the winning bid for 100 per cent stake in Air India at Rs 18,000 crore (File Photo)

The Tata Group, which placed the highest bid of Rs 18,000 crore in the Air India disinvestment, will take over the airline from the government on Thursday (January 27).

Tata Sons Chairman N Chandrasekaran arrived in New Delhi early on Thursday, and was expected to meet Prime Minister Narendra Modi ahead of the process being concluded.

What does the formal handing over of Air India to the Tatas mean? What will happen now?

Once the necessary documents are signed, Air India’s current board, which comprises seven directors including a chairman and managing director, will resign from their positions making the way for a Tata-appointed board to take over.

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Following this, the key decision-making authority will lie with the new owners.

What has happened in the run-up to Thursday’s transfer?

Ahead of the transfer, one of the final legs of the deal was the finalising of Air India’s balance sheet. The final balance sheet, with a cutoff date of January 20, was shared by the airline with the Tata Group on Monday (January 24).

In October last year, the government announced the Tata Group as the winning bidder in Air India’s disinvestment process. Following the announcement, a letter of intent was issued by the government expressing its willingness to transfer 100% of its stake in the airline to the Tata Group.

How much did the Tata Group bid?

The Tata Group placed the winning bid for 100 per cent stake in Air India at Rs 18,000 crore, of which Rs 15,300 crore was the debt component and Rs 2,700 crore was the cash component to be paid to the government.

The remainder of the airline’s debt will be transferred to a special purpose vehicle created by the government, which will repay the debt through monetising some of Air India’s land assets, in addition to financial support by the government.

What does the Tata Group gain with having Air India under its umbrella?

The addition of Air India to its aviation portfolio will give the Tata Group — which already includes full-service carrier Vistara (a joint-venture with Singapore Airlines), and budget airline AirAsia India — a significant leg-up in its international operations, as it gets access to 1,800 international landing and parking slots at domestic airports, and 900 slots at airports overseas, in addition to the 4,400 domestic slots.

This includes routes and slots at prime locations like London and New York, and a wide-bodied aircraft fleet essential for long-haul operations. In addition, the group gets access to Air India’s 49 wide-bodied planes, 128 narrow-bodied planes, and Air India Express’ 25 narrow-bodied planes.

What happens to some of the other assets owned by Air India?

Certain immovable assets held by the airline such as real estate, housing projects, etc have been transferred to the special purpose vehicle Air India Asset Holding Ltd, and will be monetised to repay the airline’s outstanding debt.

The airline’s art collection, which comprises over 4,000 works, however has been left out of the both disinvestment and asset monetisation processes.

The Ministries of Civil Aviation and Culture are working out an agreement to transfer the collection to Delhi from Mumbai, New York, Washington, Perth, Rome, Tokyo, Paris, and London, and display it at a prominent museum.

And what will change in the Air India experience for the ordinary flyer?

That is one of the most anticipated questions for customers and the public. No details are available as yet, but a statement on what will change — or not change — in the flying experience can be expected soon.

A PTI report on Thursday morning, quoting unnamed officials, said that an “enhanced meal service” will be provided on four flights — AI864 (Mumbai-Delhi), AI687 (Mumbai-Delhi), AI945 (Mumbai-Abu Dhabi) and AI639 (Mumbai-Bengaluru) — which will be expanded to the airline’s Mumbai-Newark flight and five Mumbai-Delhi flights on Friday.

The “enhanced meal service”, devised by the Tata Group, will be expanded to more flights in a “staggered and phased manner”, the PTI report said.

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