Air India Set For A Homecoming With The Tata Group, 68 Years After It Was Nationalised

In a not-so-surprising development, the Tata Group has reportedly emerged as the winning bidder for India's national carrier, Air India.

ANI, quoting sources reported that Tata Sons was the highest bidder and that Union Home Minister Amit Shah-led ministerial panel has given approval for the deal that would see the loss-making flagship carrier being privatised.

BCCL

Union finance minister Nirmala Sitharaman, commerce minister Piyush Goyal and aviation minister Jyotiraditya Scindia were among the members of the committee that evaluated the bids.

According to reports, SpiceJet was also among those who had expressed interest to buy Air India.

The government however clarified that no official decision has been taken so far.

Media reports indicating approval of financial bids by Government of India in the AI disinvestment case are incorrect. Media will be informed of the Government decision as and when it is taken: Secretary, Department of Investment and Public Asset Management, GoI pic.twitter.com/PoWk7UceF5

¡ª ANI (@ANI) October 1, 2021

Bidding process

The share purchase agreement (SPA) was given to the bidders in the meeting recently and the process will start after a formal announcement is made, following its approval by the Shah-led ministerial committee.

"The process of transfer will start with the SPA and the target is to completely hand over the airline to the new owners in around four months of time," a ministry official said.

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"The approved bidders will have to deposit a minimum of 15 per cent of the bid amount," the official said.

Air India's reserve price was fixed after the bids were called to ensure that the bidders do not get to know about the reserve price prior to their bidding. It ensured utmost confidentiality when it comes to the reserve price.

Tata Airlines to Air India

This is also a homecoming for Air India, which was originally founded by JRD Tata as Tata Airlines in 1932.

It was renamed Air India in 1946 and the Tata Group lost control of the airline after it was nationalised by the government in 1953.

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Post the opening up of the skies, allowing low-cost private airlines to operate in India the flagship carrier, nicknamed Maharaja found it difficult to fight against them.

It was also bleeding money and as of March 2019, Air India had a total debt of Rs 60,074 crore.

Despite several attempts to infuse more funds and sell off assets to pay the debt, a turnaround looked unlikely for Air India, and it was feared that the national carrier may have to be grounded for good.

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It is at this point, the government decided to sell it off to private players, a move that also initially failed to attract any solid responses.

However, given the history, many analysts had predicted that the Tatas would bid for Air India.

Vistara, Air Asia and now Air India

The Tata Group already operates two airlines in India - low-budget carrier Air Asia India, in partnership with Malaysia-based Air Asia, and another full-service carrier Vistara, in partnership with Singapore Airlines.

Air Vistara

It is still unclear how Air India will fit into the Tata Group's current portfolio.

There are some reports suggesting that the Tata Group may merge Air India and Air Asia as a single entity and will focus on the low-budget segment, while Vistara will continue as a full-service carrier.