The Tata group has announced that it has acquired Air India, effective January 28th, 2022. The move is seen as a strategic one by the group, as it looks to expand its reach in the aviation sector.
Commenting on the acquisition, Mr. Ratan Tata, Chairman of the Tata group said, “We are excited to add Air India to our portfolio of businesses. With its rich heritage and strong brand name, we believe that air India will be a valuable addition to our group.”
He added that the Tata group was committed to turning around Air India and making it profitable again. “We are confident that with our experience and expertise, we will be able to revive this iconic airline and make it successful once again. With its rich history and legacy of over 70 years, it has built deep connections with many Indians. We want to build on this heritage and connect with even more people in India and around the world.”
Air India currently operates flights to three international destinations – New York, London, and Tokyo. Once the acquisition is complete, the Tata group will look to expand Air India’s network significantly. A source close to Mr. Tata said that he had considered acquiring Kingfisher Airlines at one point but decided against it upon doing his due diligence. “He found out that there was no solid business plan in place,” said our source. “Now he wants to make sure that all his acquisitions are strategically placed
Mr. Tata added that Air India would be turned around under the stewardship of Mr. Natarajan Chandrasekaran, currently Tata group chairman designate. “I have worked closely with Chandra for over 25 years now,” he said. “He is an extremely capable leader who will ensure that Air India becomes a profitable airline once again.”
The deal has brought to light some major questions about the future of Indian civil aviation. While it is common knowledge that most airlines are bleeding heavily today, none have been as badly hit as Air India which was being propped up by taxpayers’ money till recently. The question many are asking now is whether there’s any need for TATA to acquire this airline?
Mr. Raghuram Rajan, Governor of the Reserve Bank of India, commented that he wasn’t sure if TATA was the right suitor for this acquisition. “I’m not convinced that Tata is well suited to run an airline,” he said. “I think a better option would have been a private equity firm or a venture capital company.”
Our source close to Mr. Rajan added, “He feels this is a bad decision in many ways and will hurt the aviation industry even more than it already has been.”
Currently, nearly half of Air India’s aircraft are grounded due to lack of funds or shortage of spares while employees continue to go on strike citing non-payment of salaries. Outgoing civil aviation minister Ajit Singh has conceded that things haven’t gone as planned and that the merger was not a success.
“I don’t know if we thought through the idea of merging Air India and Indian Airlines,” he said. “It may turn out to be one of our biggest mistakes.”
Air India’s new tagline is ‘we are now your Tata airline’. What do you think about this? Let us hear from you in comments below.