Air India Returns: After a gap of 68 years, Air India is all set to return to the Tata fold with a winning bid of Rs 18,000 crore.
- Tata Sons wholly owned subsidiary Talace Pvt. Ltd. emerged as the winning bidder for the debt-laden national carrier.
- A panel of ministers led by Home Minister Amit Shah gave its approval to the salt-to-software conglomerate’s offer over that of SpiceJet chairman Ajay Singh, the only other bidder in the fray.
- The government aims to complete the transaction by December 2021, when it will transfer its shares and hand over the airline to the new buyer.
About the Deal:
- Of the bid amount of Rs 18,000 crore, the Tatas will pay Rs 2,700 crore in cash, while taking the remaining Rs 15,300 crore as debt.
- The Tatas will own a 100% stake in Air India, as also 100% in its international low-cost arm Air India Express and 50% in the ground handling joint venture, Air India SATS.
- Apart from 141 aircraft and access to a network of 173 destinations, including 55 international ones, Tatas will also have the ownership of iconic brands such as Air India, Indian Airlines and the Maharajah.
- It will provide a very strong market opportunity to the Tata Group’s presence in the aviation industry.
- Tata Sons owns 84% share in Air Asia, which has a market share of 5.2%, and 51% stake in Vistara, which has a market share of 8.3%.
- Together with Air India’s market share of 13.2%, Tatas could be in control of 26.7% market share, and be the second biggest player after IndiGo.
History of Air India:
- Air India, (initially known as Tata Aviation Service) was founded by the legendary industrialist and India’s first commercially licensed pilot Jehangir Ratanji Dadabhoy (JRD) Tata in 1932.
- He piloted the first flight of Air India.
- It was a cargo flight which soon became a soon became a profit-making venture.
- Tata changed the name to Tata Airlines in 1938.
- As India gained Independence, the Jawaharlal Nehru government took over Air India through nationalization in 1953.
- At that time, the government had paid Rs 2.8 crore to Tata Group and took over a 100 per cent stake in the venture.
- In 1946, the aviation division of Tata Sons was listed as Air India, and in 1948, the Air India International was launched with flights to Europe.
- Since its nationalization in 1953, Air India remained the prized possession for India controlling the majority of the domestic airspace for the next 4 decades.