With Air India up for sale, the Tata Group is reportedly keen on bidding for the national carrier. It appears to be certain that the two men at the helm of the Tata Group, Ratan Tata and N Chandrasekharan, are both keen on bidding for Air India. They have to get their overseas partners to agree to it.
The Tata group is currently running two airlines, Air Asia India and Vistara. While Air Asia India is a budget carrier where the Tatas hold 51% and Tony Fernandes, the Air Asia Chief holds the remaining 49%, in the case of Vistara, it’s a full-service carrier, with Singapore Airlines holding 49% to the Tatas’ 51%. As per the latest report, the Tatas want to merge Air Asia India with Air India Express, the budget carrier which is 100% owned by Air India. The report claims the talks with the partners have already been initiated. The strategy for now will be for the Tatas to bid for Air India and if they are successful, then Air India Express could be run as a budget carrier by merging it with Air Asia India and Air India can be run as a full-service carrier in collaboration with Singapore Airlines. This will become a win-win formula for all stakeholders.
Tony Fernandes cannot be directly involved in the bidding process since there are bribery allegations against him and he is being investigated by the Enforcement Directorate. But his consent to bid for Air India is required by the Tatas since the agreement between them states that Tatas cannot buy more than 10% in another budget carrier without Fernandes’ approval. It is learnt that the approval to bid for Air India is being sought now.
Air India Express has a fleet of Boeing 737s and it touches 20 Indian airports and 13 overseas destinations, largely in the Gulf and South East Asia. Air Asia India has 29 Airbuses and is servicing 21 Indian cities. The airline has been requesting for permission to operate overseas flights.
There’s time till March 17, 2020 to submit the bids by way of expression of interest, after which the real process may start.