Sixty-seven years after the Tata group gave control of its airline venture Air India to the government, Tata Sons has reportedly submitted an expression of interest for the beleaguered airline. The Air India bid will add to its two existing airline business – Vistara that it operates with Singapore Airlines and AirAsia India that it runs with AirAsia Berhad.
According to the Times of India, Tata Sons is submitting its Expression of Interest (EoI) through AirAsia India, where it has the majority share (51%). If the Tatas are successful in their bid for Air India, it will reportedly give the company around 23% market share in India’s domestic aviation market, higher than SpiceJet. It could also reportedly have a near-monopoly when it comes to international routes.
According to the Business Standard, Tata Sons is currently solely bidding for the state-owned airline, and Singapore Airlines, which was earlier reported to be bidding for Air India with Tatas will not be a part of the initial stages of the bid.
Singapore Airlines wasn’t reportedly keen on being part of the bid as buying a debt-laden distressed airline like Air India would add to its financial troubles and also to that of Vistara, both of which have been hit hard due to the pandemic. Singapore Airlines is currently in the process of raising around $15 billion to tide over the current financial crunch. It had posted its biggest loss in a quarter due to the pandemic, which had brought international travel to a near standstill.
However, BS reports that the sale process for Air India allows for an interested bidder to bring in new partners through the bidding process, indicating that Singapore Airlines could join in the near future if the situation were to improve.
Meanwhile, AirAsia India, which was formed before Vistara, can reportedly pivot to becoming a full-service airline with Air India’s assets. It was also recently reported that Tata Sons is planning to increase its stake in AirAsia to over 76% by 2020-21. Business Standard reported that AirAsia would become a Tata airline soon even though AirAsia Berhad will continue to hold a minority stake for the time being.
Air India was founded as Tata Air Services by JRD Tata back in 1932, which was later renamed to Tata Airlines, which made its maiden domestic flight to Trivandrum from Bombay. The company went public in 1946 and was renamed as Air India. In 1953, which the government passed the Air Corporations Act, it bought a majority stake in Air India, renamed it Air India International Limited and transferred its domestic services to Indian Airlines.
After failing to get a bidder for the state-owned carrier, the Union government offered 100% stake in Air India as against 76% earlier. It also relaxed several bidding criteria to generate interest for Air India. The latest among them was that interested parties can bid on the enterprise value of the airline.
BS quotes government officials involved in the sale process as saying that they expect a good response for the airline and expect to complete the sale process by the first half of June 2021.