Tata Group Expected To Win In Air India Sale

The long-running battle to sell off Air India is drawing closer to a close. Reports in media today suggested that Tata Sons was most likely to win, with some outlets even reporting an imminent announcement as such. But the Indian government has said these reports are incorrect, and that no decision has yet been reached.

Air India
The Tata Group is pegged to be announced as the winner in the coming days. Photo: Vincenzo Pace | Simple Flying

Has Tata won Air India?

The privatization of Air India feels like aviation’s longest-running saga. Following much back and forth, the situation came to a head earlier this year, when Civil Aviation Minister Hardeep Singh Puri issued a bold ultimatum – get the privatization completed, or shut the airline down.

The process gained momentum after that, with two front runners leading the race to acquire the national carrier – the Tata Group and SpiceJet Chairman Ajay Singh. As the final bids were submitted in mid-September, an announcement was expected imminently.

This morning, Bloomberg reported that the deal was done. It claimed that Tata Sons had won the bidding, saying that a panel of ministers had accepted the proposal, although the information was not yet made public. Reporting suggested that an announcement would be made in the next few days.

However, in a tweet this morning, the finance ministry responded by saying that the reports are incorrect.

The ministry advised that the media would receive advice on the final decision once it has been made. The selloff of the airline will be a huge victory for India’s current prime minister, Narendra Modi. Multiple governments have attempted to sell off the loss-making airline, but Modi will be the first to succeed, as other efforts have resulted in either a lack of interested bidders or political opposition.

Going full circle

If, as is strongly anticipated, the Tata Group does indeed win the bid for Air India, it would be a case of coming full circle, as the airline started life eighty years ago as Tata Air Services. Founded by well-known businessman J R D Tata, the airline started life flying mail around Karachi and Bombay, with Tata himself taking the controls of its first aircraft, a single-engine de Havilland Puss Moth.

JRD Tata
J R D Tata flew the first aircraft himself. Photo: Tata Group

The airline grew from there, rebranding to Tata Airlines and starting to fly passengers as well as cargo. After World War II, the airline became a public limited company and was renamed Air India. 49% of the airline was acquired by the Indian government in 1948, and in 1953, it became the majority owner.

Since its merger with Indian Airlines in 2007, the carrier hasn’t turned in a single profitable year. It is saddled with debts in excess of $8 billion, but it does have some assets that will be highly regarded by the bidders.

The winner is expected to gain control of Air India’s 1,800 international and 4,400 domestic landing slots at Indian airports, as well as 900 slots at overseas airports, including the highly in-demand London Heathrow.

Also included in the sale is Air India Express, and half of the Air India SATS Airport Services PVT Limited (AISATS), its cargo and ground handling arm.