With Tata Sons emerging as Air India next owners, this handover could come as a relief for Prime Minister Narendra Modi as the enterprise, for decades, was bleeding the government.
Tata Sons have emerged as the winning bidder for Air India, a debt-ridden airline that was nationalised in 1953, reports said on Friday. The selection of Tata Sons to lead Air India may seem like history coming full-circle as it was the same group that built India’s first airlines in 1932 and called it the Tata Airlines. Tata Airlines, which was a brainchild of JRD Tata and a veteran World War I pilot Nevill Vintcent, was renamed Air India in 1946 after it became public.
According to a Reuters report, the government was losing ₹200 million every day to run Air India. Air India, so far, has accumulated a debt of ₹700 billion or $9.53 billion. PM Modi intended to sell the government’s entire interest in Air India since voted to power. The loss-making airline has been kept afloat by a bailout since 2012.
Air India faced numerous problems over the past two decades. The plan to privatise the airline was also floated by former prime minister Atal Bihari Vajpayee too in 2001, according to a report by Live Mint, but that did not happen.
Difficulties like out-of-date aircrafts, inability to pay its employees and lack of adequate service to passengers added to its continual deterioration. The rise of private airlines like Jet Airways, SpiceJet and IndiGo also added to its woes once they started offering competitive airfares and better services.
In order to save the airline, Air India and Indian Airlines merged under the National Aviation Company of India Limited (Nacil) but Nacil itself posted a loss of ₹2,226 crore in 2007-08. In June 2009, the then chairman and managing director of Air India, Arvind Jadhav, told employees that their salaries will be delayed by 15 days due to a cash crunch, signalling that the airlines, which once was an ideal for several Asian airlines, was going through a deep crisis. Hunger strikes by employees, strikes by pilots who opposed Air India’s cost-cutting schemes and pressure of workers’ unions during the same period also added to its downfall.
Former prime minister Manmohan Singh also tried to resurrect Air India in 2009 and asked it to prepare a restructuring plan in 2009 but despite that the airlines not only reported losses worth ₹7,200 in that fiscal year but also accumulated debt of ₹15,241 crore by 2010. Former Union finance minister Arun Jaitley in 2017 said that the losses incurred by Air India were taken care of by the government. He said that the money invested to keep Air India afloat, which at that time was to the tune of ₹50,000 crore, is the money of Indians and could be used to help citizens through several other ways other than investing in the debt-ridden airline.
“To run Air India, you have invested ₹50,000 crore. That money is the government’s money, that’s your money. It could have been used for school education. And if 86% of flying can be handled by the private sector, then it can also handle 100%,” Jaitley told Live Mint, signalling at that time itself, that the NDA-government clearly felt that it was not its business to be involved in private business or business altogether.
It will be interesting to see what Tata Sons will do different to ensure that the airline remains afloat. This task will be daunting as tourism and aviation markets have suffered immensely from the pandemic outbreak.
Source: Shankhyaneel Sarkar | Edited by Meenakshi Ray, Hindustan Times, New DelhiPhoto Credit: Air India Boeing 777 plane is seen at O’Hare International Airport in Chicago, US. (REUTERS)