May 27, 2018, 11:17 pm IST
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From Tatas to Tatas?

From Tatas to Tatas?

 Jun 22, 2017

It could be a story of Tatas to Tatas if the premier business group of India, Tata, finally buys up Air India or manages majority share of the public sector airlines.  Air India was formed in early 1953,with the nationalisation of Tata Aviation started by J.R.D.Tata in 1932.

The chances of Tatas taking interest in the takeover of Air India appears to be a distinct possibility as Chairman Emeritus of Tatas, Ratan Tata had indicated an interest some time back. Tatas are in the air line sector for some time.  The group is running Vistara in cooperation with Singapore Airlines and Air Asia in association with Malaysian Airlines.   There is a possibility of Air India bidding for Air India either in cooperation with Singapore Airlines and Malaysian Airlines or with one of them to buy up 51 per cent of the shares of Air India.

The preliminary discussions have begun with Tata Chairman, N. Chandrashekharan meeting Union Finance Minister Arun Jaitley and Union Civil Aviation Minister Ashok Gajapathy Raju a few days ago.  Though both sides did not want to talk about the discussions, Government of India is now toying  with the idea of sale of the loss making public sector corporation whose debt has touched Rs.50,000 crores.

Finance Minister Jaitley is in favour of disposal of the Corporation as it is now only having 15 per cent of the market share.  Air India, which dominated the Indian skies along with Indian Airlines, was once known for its efficiency and excellent service.  The two public sector corporations had enjoyed monopoly in the aviation business for decades.  But with liberalisation of the aviation sector, the situation changed.  To make them commercially viable, the Indian Airlines merged with Air India while Air India Express continued as subsidiary.

Tatas are not over enthusiastic about the deal as the present financial situation of the public sector airlines is not easy to put back onto a healthy financial track.  There is a feeling that taking over the huge debt of the company is inadvisable and there needs to be mutually acceptable terms on the responsibility of the debt.

Tata to Tata is probable as the Government is keen to withdraw from aviation business and prefers handing back to the premium business group of India, known for its efficient management and business acumen.  At the moment there are few takers for the Corporation deeply in red, other than Tatas.

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