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Air India Returns to Tata: What Does Maharaja's Handover to Tata Group Mean?

By: Aparna Deb

Last Updated: January 27, 2022, 17:16 IST

With Air India, Tata Group will become the second dominant player in Indian aviation market

With Air India, Tata Group will become the second dominant player in Indian aviation market

Air India disinvestment: The transfer to the Tata Group will mark the end of the disinvestment process months after the sale was confirmed.

Tata group has officially taken over Air India from the government on Thursday, nearly 69 years after it was taken from the conglomerate. The transfer marks the end of the disinvestment process months after the sale was confirmed.

What does the Maharaja’s return mean?

Air India’s transfer from the government to Tata group is unlikely to affect operations drastically, at least for the first few months. While there could be some minor changes, no major shakeups are likely for a few months. This includes changes in staff or flight operations.

Customers, too, are unlikely to be affected as flying operations will not face any changes after the transition. The only changes that fliers are likely to see will be related to branding inside and outside the aircraft.

Meanwhile, two airline pilot unions – Indian Pilots’ Guild (IPG) and Indian Commercial Pilots’ Association (ICPA) – on Monday warned Air India’s CMD Vikram Dev Dutt of legal action as “multiple deductions and recoveries have been projected” on the dues owed to pilots.

“This recovery exercise is entirely illegal, and we demand that this anomaly is rectified and the amount due is repaid with immediate effect,” the letter sent by the two unions said. Additionally, two other unions have opposed the carrier’s January 20 order to check grooming and measure the body mass index (BMI) of cabin crew members at the airports just before their flights.

These unions – Air India Employees‘ Union (AIEU) and All India Cabin Crew Association (AICCA) – on Monday wrote to Dutt opposing the order on the grounds that it is dehumanising and in violation of rules prescribed by aviation regulator DGCA.

Tata’s Love for aviation

It may be noted that 100 per cent of Air India will be transferred to Talace Private Limited, which is a wholly-owned subsidiary of Tata Sons. As a part of the deal, the Tata group will also be handed over Air India Express and a 50 per cent stake in ground handling arm Air India SATS.

Tatas, the new owner of Air India, are going to be a formidable player in the aviation ministry as they will get control of 4,400 domestic and 1,800 international landing and parking slots at domestic airports, besides 900 slots at airports overseas with Air India handover.

The Tata group already owns a majority stake in AirAsia and Vistara. So, in the long term, there chances that the group may look at merging all its airline businesses, allowing it to eliminate additional expenditure and generally more revenue. More clarity on the same may be expected post the disinvestment process is completed.

Air India Sale

Air India privatisation had been long pending. The Indian government was trying to privatise it since 2017. The national carrier has been in the red ever since its merger with Indian Airlines in 2007. The government has been infusing taxpayers’ money to keep the airline afloat. According to the civil aviation ministry, the government has infused Rs 1,10,276 crore into Air India since 2009 as equity to fund its losses.

Tata group reclaimed Air India from the government for Rs 18,000 crore on October 8, 2021 after a competitive bidding process. After that, a letter of intent (LoI) was issued to the Tata Group on October 11, confirming the government’s willingness to sell its 100 per cent stake in the airline.

The government signed the share purchase agreement (SPA) for the deal on October 25, 2021.

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first published:January 27, 2022, 16:15 IST
last updated:January 27, 2022, 17:16 IST