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Air India: India’s national carrier comes full circle



As Tata Group welcomed Air India back to the fold, the following recorded message by Ratan Tata greeted passengers onboard: "The Tata Group welcomes Air India's new customers and is excited to work together to make Air India the airline of choice in terms of passenger comfort and service."


Tata Air Services to Tata Airlines: The dawning

  • The airline was founded by JRD Tata and Nevill Vintcent, a World War 1 veteranas, as a mail carrier service.

  • The service, inaugurated in April 1932, started with carrying mails before it started to ferry passengers. The transition to passenger operations also saw the name being changed to Tata Airlines.

  • By 1940, Tata Air was operating flights between ten destinations.

  • Tata Airlines eventually became Air India in 1946, when the company went public.

How did Tata Airlines end up with the government?

  • Post independence, the Indian government set out to nationalise several industries and companies, including Tata Airlines.

  • JRD Tata was firmly against the idea, claiming it would take a toll on the aviation industry owing to the government’s inexperience with the sector.

  • JRD Tata eventually accepted to serve as Chairman at Air India and Director at Indian Airlines (then a subsidiary of Air India). He was succeeded as Air India’s Chairman by Ratan Tata in 1986.

  • In 2001, the government tried to sell 40% equity in the airline..

  • Air India merged with Indian Airlines in 2007.

  • By 2012, Air India had accrued ₹50,000 crore in debt and losses, as it made an average of ₹20 crore in losses everyday

  • The government attempted to sell a 76% stake in Air India in 2018but failed.

  • The government’s third attempt to sell a stake in the airline was successful: in April 2021, Ratan Tata bought a 100% stake in Air India for ₹18,000 crore.

What's next for Air India?

  • Air India’s handover to the Tata Group was completed in January, 2022.

  • As the Tata Group’s attempts to turn around the loss-making carrier’s fortune, one of the key points of focus will be rectification of the airline’s poor performance in the timeliness department.

  • Other changes will include addressing passengers as guests, better meal service, improved ticketing system, etc.

Can Air India be profitable?

  • Both AirAsia India and Vistara, companies in which the Tata Group holds a majority stake are yet to become profitable. Suffice it to say turning Air India into a profitable airline will be a monumental challenge to say the least.

  • In order to succeed, the Tata Group will need to establish an incredible amount of trust with customers to run for a long profitable time. Under the credible leadership of Ratan Tata, one can expect profitability in Air India.

The potential clash with a new entrant - Akasa Air

According to IndiGo CEO Ronojoy Dutta, a revamped Air India under the Tata Group would be a real challenge. At the same time, the new carrier Akasa Air will be a considerably less competitive force for the next 2-3 years.

  • Akasa Air will have slow and steady growth in the aviation industry, but the new Air India will be a real challenge to all the existing airline players in the industry.

  • Both Akasa and Air India runs internationally, so there might be a tough competition between these players.

  • Akasa Air being an Ultra Low-Cost Carrier increases the expectation to perform well with increasing its brand image due to the association with Rakesh Jhunjhunwala.


References:

  1. India Today

  2. India Express

  3. India Times

  4. ABP Live

  5. News 18

  6. Times of India

  7. Livemint

  8. The Hindu

  9. Zeebiz

  10. Moneycontrol

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