New Delhi: One thing is clear from the statement of Tata Sons’ chairman N Chandrasekaran about the group’s willingness to look at buying stake in Air India - a decision either way will depend on a whole range of factors, not merely on emotional connect the Tatas have always had with the aviation business. Air India was originally a Tata airline, launched by J R D Tata in 1923 and was helmed by him for years before the government’s abrupt nationalisation in 1953. When the government first tried to privatise the airline in 2001, the Tatas were frontrunners in association with Singapore Airlines. But dirty politicking stalled this process and the airline has remained wholly owned by the government.
Current group patriarch Ratan Tata has continued to be passionate about the aviation business, earlier again expressing interest in buying Air India whenever it was up for sale. He also lead efforts to launch two separate airlines with foreign partners in India after FDI caps were lifted and Tatas were the first potential buyer the government approached when it decided to offload a strategic stake in the airline earlier this year.
But despite the emotional baggage, what Chandra has said in interviews makes sense. A decision will depend on the government’s stance on lifting FDI caps in the sector, whether such an acquisition will provide scale to the Tatas in aviation and the future growth potential in the sector after this buy.
Remember, the group already has two separate airline ventures in India, one in partnership with Singapore Airlines (Vistara where SIA holds 49 percent stake) and Air Asia India where the Malaysian partner again holds 49 percent stake. But the share of the two airlines together is nowhere near market leadership. While it is correct that the Tatas’ emotional attachment to Air India can neither be denied nor belittled, that alone should not push the group into yet another acquisition. The first attempt at privatising Air India was a botched up one, when dirty politicking stalled the entire process. Singapore Airlines had teamed up with the Tatas even then to buy 40 percent stake in Air India in 2001, but the sale never happened.
10/10/17 Sindhu Bhattacharya/First Post
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Current group patriarch Ratan Tata has continued to be passionate about the aviation business, earlier again expressing interest in buying Air India whenever it was up for sale. He also lead efforts to launch two separate airlines with foreign partners in India after FDI caps were lifted and Tatas were the first potential buyer the government approached when it decided to offload a strategic stake in the airline earlier this year.
But despite the emotional baggage, what Chandra has said in interviews makes sense. A decision will depend on the government’s stance on lifting FDI caps in the sector, whether such an acquisition will provide scale to the Tatas in aviation and the future growth potential in the sector after this buy.
Remember, the group already has two separate airline ventures in India, one in partnership with Singapore Airlines (Vistara where SIA holds 49 percent stake) and Air Asia India where the Malaysian partner again holds 49 percent stake. But the share of the two airlines together is nowhere near market leadership. While it is correct that the Tatas’ emotional attachment to Air India can neither be denied nor belittled, that alone should not push the group into yet another acquisition. The first attempt at privatising Air India was a botched up one, when dirty politicking stalled the entire process. Singapore Airlines had teamed up with the Tatas even then to buy 40 percent stake in Air India in 2001, but the sale never happened.
10/10/17 Sindhu Bhattacharya/First Post
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