In a major step towards privatisation of State assets, the Union governement was finally able to sell Air India after trying for 20 years.
Tata Sons, the original owners, took full control of the 'maharaja of the skies', as Air India is known, with its winning bid of Rs 18,000 crore, of which Rs 15,300 will go into financing the airline's debt and the rest as an upfront cash payment.
For the Tata’s, purchasing Air India is both an emotional and a long-term bet. At one end, they have regained control of one of the company's first major projects, started by JRD Tata way back in the 1930s and on the other, it's a re-entry into the competitive Indian airline industry and rebranding Air India with the Tata business values will be a big financial challenge.
How big exactly? According to a Hindu report, Tata could be looking at forking out an additional Rs 24,000 crore for just covering the operation and terminal services costs. And this is not counting the additional expenses of wages, pensions, and rebranding. So Tata’s upcoming journey with Air India is certainly a long-haul flight.
In today’s episode, we discuss the challenges that Tata Sons may face with Air India, the current competition in the industry, and what it must do to make the airline fly high again.
(At The Quint, we question everything. Play an active role in shaping our journalism by becoming a member today.)