Homecoming of sorts?

by February 5, 2020 0 comments

Rumours are rife that the Tata Group will buy out Air India. What will that mean for its employees?

In retrospect one could ask what came out of the nationalisation of Air India. After all, the Tata Group bestowed the airline to the nation with a unique identity, one that still exists today. Although the airline, as we know it now, is still a bloated, yet hollow shell of its former self. It has been used and abused by politicians and bureaucrats over the years with questionable purchases of aircraft and dubious lease agreements, let alone hiring employees more interested in politics and corruption. However, things have been brought back on track over the past few years with new aircraft, the membership of a global alliance and profitable new routes to the US and Europe. The creation of a low-cost operation in Air India Express to ferry passengers, particularly between southern India and the Arabian peninsula, has done very well for itself.

So is the Tata Group the right suitor at the right time? It already has two airline ventures in India, the full-service Vistara with Singapore Airlines and no-frills Air Asia India with Malaysian low-cost operator Air Asia. Any takeover will have to get approval of both these partners and the question arises about whether these partners will put in any cash towards the Air India purchase. Then, of course, how will Tata integrate Air India into its current operations and what will happen to the thousands of employees, many of whom are fearful that any new owner will want to clear out the deadwood. Then again, with an existing alliance with Singapore Airlines, also a Star Alliance member, the Tata Group might find it easier to integrate an airline such as Air India, with Air India Express likely being integrated into the no-frills operation. Does it make sense for the Tata Group to spend so much money, over $3 billion, even with the Government covering some of the accumulated losses. It did not bite when Kingfisher’s Vijay Mallya and Jet Airways’ Naresh Goyal went begging to them, even though both had established airlines. So why Air India? Possibly the fact that JRD Tata was so closely linked to the airline, even serving as its Chairman till 1977. In fact, Air India preserves JRD Tata’s desk at its headquarters in Mumbai to this day. At the same time, Air India has significant international and domestic operations, even though they are well behind IndiGo on the domestic front. In addition, the Tata brand is still one that many Indians respect and a sale to the Tata Group will not draw the ire of the public, let alone the Opposition. Provided the buyout works.

(Courtesy: The Pioneer)

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