Who
understands Air India better than the Tatas? JRD Tata not only founded Tata
Airlines that later became Air India but he stayed on as chairman for 25 years.
Now, fresh speculations are rife that Tata Group may buy a stake in Air India.
In the highly competitive Indian
aviation market, Air India, the country’s flag carrier, has long been
struggling. The ‘Maharajah’ is beset with a debt of over Rs 52,000 crore and
has been teetering on a bailout package that was extended by the government in
2012. Over the last two decades, calls for partial or complete
privatisation of the airline have often risen although no substantive
solution was ever found.
Earlier this month, Finance Minister Arun Jaitley, in
surprising remarks, said in an interview that he would sell the airline
completely if given a choice. “Air India can continue to be a national carrier
and somebody else pay for its management,” he told ET Now.
Now, reports are emerging yet again that the Tata Group, one of
the country’s biggest conglomerates, is holding discussions with government
representatives about buying a stake in the beleaguered airline. The company,
of course, hasn’t confirmed the speculations but if true, we may be looking at
the national airline making a return to its place of birth.
Air India, before its nationalisation, used to be known as Tata
Airlines having been founded by former chairman of Tata Group, JRD Tata in
1932. Tata, right from his childhood, was passionate about flying through his
association with the family of Louis Bleriot, a French aviator, and got his
first shot to ride in an aircraft in 1919 when he was just 15 years old. His
aviation ambitions came true 10 years later in 1929 when he became the first
man in India to get a commercial pilot’s license. Three years later, Tata
Airlines was born with an initial investment of Rs 2 lakh from Tata Sons and
two second-hand de Havilland Puss Moths. In the autumn of 1932, in India’s
inaugural flight, Tata himself piloted a single-engine plane carrying 25
kilograms of mail from Karachi to Bombay. The mail used to come to Karachi from
England by the Imperial Airways.
In subsequent years, Tata Airlines also
ran commercial operations apart from the usual mail deliveries, often making
stops between Mumbai and Trivandrum and then later to Delhi, Gwalior and
Bhopal. Six years after its birth, Colombo became the airline’s first
international destination charting a growth map few airlines were able to match
within such a short span of time. It also conducted several trips during the
Second World War carrying refugees from Burma and constantly engaged in the
maintenance of RAF equipment.
In 1946, Tata Airlines was re-christened Air India Ltd after it
became a joint stock company and opened its office on the second floor of the
head office of Tata Group. While relations between the government and the
company were initially smooth post-independence, rumours soon began to
swirl of the airline along with a host of other companies being considered for
nationalisation, a proposition JRD was not comfortable with.
“J.R.D objected at once: If nationalisation could be shown to be
in the public interest, he said, then he would be entirely in favour. But there
was no evidence that this would be the case. India’s new government had no
experience in running airlines and, particularly in so far as passenger safety
was concerned, it was vital that management stayed in experienced
hands,” Morgen Witzel, a Canadian author, writes in his book ‘Tata: The
Evolution of a Corporate Brand.’
The government’s defence was that there was a need for order and
rationalisation in the industry as carriers were quickly going bankrupt.
“JRD’s counter arguments were in vain. By 1953, the decision had
been made,” Witzel writes. Air India was nationalised.
However, JRD stayed on as chairman at
the request of then prime minister Jawaharlal Nehru and continued in that
position for 25 years until he was sacked in 1977 by then prime minister
Morarji Desai. This is widely considered a period in which the airline was at
the height of its glory quickly expanding to Europe and Africa and offering
finest airline services for domestic and international passengers.
“He saw to it that standards were not compromised; the airline’s
safety record and its reputation among Indian and international passengers were
both excellent,” Witzel wrote. Air India’s monopoly over Indian skies was
absolute according to the Air Corporations Act, 1953 as private operations were
not allowed to fly. That practice ended in 1994 when the Act was repealed and
private airlines came into the picture.
But over the years, Air India accumulated mounting debt through
the 90s and 2000s with government apathy, the merger with Indian Airlines and
its patronage of politicians and parliamentarians often cited as reasons.
Today, the airline is in third spot in terms of domestic market share behind
IndiGo and Jet Airways.
In 2015, Tata Group, after several
decades, re-engaged with the Indian aviation market when it launched an
airline, Vistara, in conjunction with Singapore Airlines. It operates to 20
destinations within India at the moment.
Now with speculations that Tata Group will participate in Air
India’s privatisation process, there is renewed interest in the industry about
curtailing the airline’s losses and setting it on the right path. After all,
who understands Air India better than the Tatas is the popular sentiment.
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