Saturday, October 08, 2022

One year on, Tata group company Talace is juggling multiple variables to take Air India sky high

Exactly two years after the Preliminary Information Memorandum (PIM) — a document that gives potential investors an overview of a deal — was released by the government, the Tata group took control of Air India on January 27, 2022.

Today is a year since Talace Pvt. Ltd, a Tata group subsidiary especially created to bid for Air India, won the bid. While airlines the world over were being bailed out by their governments, India was working on privatising the state carrier, and saw the process through to conclusion.

For an airline to make money it has to fly, and to fly it needs planes, and that is where the erstwhile state carrier’s expansion had been stuck. The Tatas inherited an airline with a grounded fleet. They worked tirelessly to get more and more aircraft back in the air in ship-shape, by repairing engines, doing up the interiors, etc. The next phase could see improvements in the product experience, like ground handling, meals, and fixing the in-flight entertainment (IFE), among others.

The new owners started off on the wrong foot with the appointment of Ilker Ayci as CEO. Ayci declined Tata Sons’ offer to head Air India as certain sections of the political establishment had voiced concerns over Ayci’s appointment, as he was supposedly close to Turkish President Recep Erdogan.

The group then announced the appointment of Campbell Wilson, a Singapore Airlines veteran with experience in both full-service and low-cost segments, to captain the ship.

Within a month of the formal handover to the Tata group, Russia attacked Ukraine. The war is ongoing and has had an impact on aviation in more ways than one.

While oil prices skyrocketed and the rupee slipped against the dollar, an opportunity like no other presented itself. The sanctions on Russia and reciprocal sanctions by Russia meant that most airlines couldn't fly over Russian airspace.

This led to cancellations, longer flight times, and in some cases, technical stops. The likes of Finnair, which were heavily dependent on the use of Russian airspace, had to cancel flights and launch new routes like those to Mumbai, to utilise their planes.

Air India, on the other hand, continued to fly over Russia. As other airlines started dropping routes, Air India continued apace and most often had the shortest route as well.

Sanctions on Russia also meant that new aircraft meant for airlines in Russia were suddenly available for others. There were strong rumours of an order for new planes from Air India — an order that has so far not been placed.

Instead, the airline is leasing five B777-200LRs aircraft, and will also introduce a premium economy class. This is an interesting development as it had recently come out with a tender to sell the three B777-200LRs it owns.

The order, in all likelihood, is still in the works, but would be placed after thorough due diligence regarding long-term fleet renewal for the entire group comprising three airlines, if not four (Air India, Vistara, Air Asia India, Air India Express).

08/10/22 Ameya Joshi/Moneycontrol

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