It’s been a little over four years since India’s Tata group made a much-celebrated comeback into the country’s aviation sector.
In 2013, after staying on the sidelines for over six decades, the salt-to-software conglomerate returned to India’s aviation sector through two joint venture (JV) partnerships with Malaysia-based AirAsia Bhd and Singapore Airlines. The Tata group had founded Air India (AI), then Tata Airlines, in 1932, which the Indian government took control of in 1953. Ever since, the group had stayed out of the airline business.
Now, it is eyeing a bigger slice of India’s aviation pie. On Oct. 10, chairman N Chandrasekharan told business news channel CNBC that his group would consider acquiring the beleaguered national carrier Air India, which the Narendra Modi government wants to jettison.
This isn’t the first time that the Tatas have shown interest in AI, currently India’s fourth-largest airline by market share. In 2000, the group partnered with Singapore Airlines to bid for a 40% stake in the company, but the plan didn’t materialise as the southeast Asian carrier withdrew.
“We will definitely look at it (AI),” Chandrasekaran said in the interview to CNBC. “We still don’t have all the details. Every business proposal will be very seriously looked at and we will look at that (AI). Definitely. But currently we don’t have the data…there are so many different groups within Air India, and then there is real estate, there is debt, there is liabilities, and we got to look at all of that…but we will definitely look at it.”
The $103 billion Tata Sons’ interest in AI could have stemmed from the lacklustre showing of AirAsia and Vistara. Together, they have a domestic market share of only 7.6% with a fleet of 29 aircraft. This is significantly lower than market leader IndiGo’s 38% with 138 aircraft.
“We need to look at aviation as a whole,” Chandrasekaran said. “We are subscale. We got two airlines both are subscale. Any decision that we take—Air India or otherwise—we have to have a story because we can’t be operating with 15 aircraft or 20 aircraft.”
The Tata group owns 51% of Vistara, with Singapore Airlines in control of the rest. In AirAsia India, it owns 49%, while the rest is held by Malaysia’s AirAsia Bhd. Over the past few years, both Vistara and AirAsia India have been looking at international operations but have been held up by regulatory hurdles, hampering business and profitability.
India’s aviation norms require an airline to deploy 20 aircraft, or 20% of its fleet, on domestic routes before it can take off on international routes. Vistara and AirAsia India have only 16 and 13 aircraft respectively.
12/10/17 Manu Balachandran/Quartz
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In 2013, after staying on the sidelines for over six decades, the salt-to-software conglomerate returned to India’s aviation sector through two joint venture (JV) partnerships with Malaysia-based AirAsia Bhd and Singapore Airlines. The Tata group had founded Air India (AI), then Tata Airlines, in 1932, which the Indian government took control of in 1953. Ever since, the group had stayed out of the airline business.
Now, it is eyeing a bigger slice of India’s aviation pie. On Oct. 10, chairman N Chandrasekharan told business news channel CNBC that his group would consider acquiring the beleaguered national carrier Air India, which the Narendra Modi government wants to jettison.
This isn’t the first time that the Tatas have shown interest in AI, currently India’s fourth-largest airline by market share. In 2000, the group partnered with Singapore Airlines to bid for a 40% stake in the company, but the plan didn’t materialise as the southeast Asian carrier withdrew.
“We will definitely look at it (AI),” Chandrasekaran said in the interview to CNBC. “We still don’t have all the details. Every business proposal will be very seriously looked at and we will look at that (AI). Definitely. But currently we don’t have the data…there are so many different groups within Air India, and then there is real estate, there is debt, there is liabilities, and we got to look at all of that…but we will definitely look at it.”
The $103 billion Tata Sons’ interest in AI could have stemmed from the lacklustre showing of AirAsia and Vistara. Together, they have a domestic market share of only 7.6% with a fleet of 29 aircraft. This is significantly lower than market leader IndiGo’s 38% with 138 aircraft.
“We need to look at aviation as a whole,” Chandrasekaran said. “We are subscale. We got two airlines both are subscale. Any decision that we take—Air India or otherwise—we have to have a story because we can’t be operating with 15 aircraft or 20 aircraft.”
The Tata group owns 51% of Vistara, with Singapore Airlines in control of the rest. In AirAsia India, it owns 49%, while the rest is held by Malaysia’s AirAsia Bhd. Over the past few years, both Vistara and AirAsia India have been looking at international operations but have been held up by regulatory hurdles, hampering business and profitability.
India’s aviation norms require an airline to deploy 20 aircraft, or 20% of its fleet, on domestic routes before it can take off on international routes. Vistara and AirAsia India have only 16 and 13 aircraft respectively.
12/10/17 Manu Balachandran/Quartz
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