Friday, January 12, 2018

Tatas can bring Air India back to its former glory: G R Gopinath

GoI's decision to allow 49% foreign airline equity in Air India is good news. The rules were changed last year permitting 100% foreign equity in Indian carriers, restricting foreign airlines holding to 49% — excluding Air India. The move will attract better valuation for the national carrier.

The news that the Tatas have shown interest to bid for Air India, along with Singapore Airlines, after the Union Cabinet amended the rules has spread cheer. It is only befitting that the once great airline, now decrepit, goes back into the hands of the business house that founded and nurtured it in its formative years.

GoI can snatch any jewel from anyone and appropriate it as it did when it nationalised (and renamed) Tata Airlines. But it can't unilaterally hand Air India back to the Tatas for a negotiated price. The latter will have to participate in a bid to earn back what was essentially theirs.

Although J R D Tata transformed the Tatas into a globally respected corporate house, was respected as a visionary business leader, and revered for his humanitarian work, he was best known as an intrepid aviator who built a great and endearing airline with a huge national and international network. During his reign, working for Air India was the most coveted job in India, coming as it did with glamour and prestige.

Though jaded, Air India, however, is a much-loved brand, evoking fond nostalgia. If the government plays its cards well and acts with prudence and transparency, it can still unlock the airline's true value and potential, and realise good returns. First, the bidding process must be a global, open, transparent electronic tender.
12/01/18 G R Gopinath/Economic Times