Air India soon to be back in Tata hangar

01 Oct 2021


Tata Sons is reported to have emerged the top bidder or Air India privatisation with a Rs23,000-crore offer, which is Rs3,000 crore more than the Rs20,000 crore reserve price set by the government and above the price quoted by rival bidder SpiceJet. 

As per reports, the panel of ministers appointed to oversee the Air India divestment process has accepted the Tata Group’s proposal to take over the airline. The government, however, refuted media reports, saying that nothing has been decided yet.
"Media reports indicating approval of financial bids by Government of India in the AI disinvestment case are incorrect. Media will be informed of the government decision as and when it is taken," Tuhin Kanta Pandey, secretary, Department of Investment and Public Asset Management (DIPAM), tweeted.
On Thursday, former Air India director Jitender Bhargava had said that Tata Group will likely receive the government’s nod considering how the company is capable of revamping the flag carrier.
"The Tatas have placed the highest bid for Air India," a Moneycontrol report quoted sources as saying, adding that an official decision on the disinvestment rollout will be taken in the next few days. 
CNBC TV-18 has reported that the government plans to complete the handover of the airlines to its new owners by December.
Considering that Tata Group icon JRD Tata had founded the airline and had piloted the first flight in 1932, Tatas have been very passionate about getting back Air India.
The group had submitted the final bid for the airline on 15 September. Sources indicated that the bid submitted by Tata Sons was Rs 3,000 crore more than the minimum reserve price set by the government committee, India Today reported.
While the government will be using the Rs23,000 crore to partially repay Air India’s Rs70,000-crore accumilated losses, Tatas will be paying a heavy price for acquiring the national flag carrier.
"The Tata group as part of its bid has also proposed to negotiate and acquire a certain amount, at max 15 per cent, of Air India's debt if the government is willing to meet certain requirements set by them," Moneycontrol quoted an official as saying.
Reports also said that the Tata group may be willing to acquire up to 15 per cent of Air India's debt, as part of the agreement reached with the government.
The airline that JRD Tata founded nearly 90 years ago has now come a full circle. It was JRD Tata who founded the airlines with a small capital of Rs2 lakh given by a reluctant Sir Dorabji Tata, the then chairman of Tata Sons. JRD also piloted the first flight, a Puss Moth, that inaugurated Indian aviation in 1932.
In 1946, the aviation division of Tata Sons was listed as Air India and, in 1948, the Air India International was launched with flights to Europe. The international service was among the first public private partnerships in India, with the government holding 49 per cent stake in it, the Tatas having 25 per cent and the public owning the rest.
To JRD’s shock, Air India was nationalised in 1953. But the then Prime Minister Jawaharlal Nehru justified the act, saying as a matter of state policy, the government has always thought that transport services of almost all kinds should be state-owned.
The divestment process, however, has to be approved by the Air India-Specific Alternative Mechanism, which is an empowered group of ministers comprising home minister Amit Shah, finance minister Nirmala Sitharaman, commerce minister Piyush Goyal and others, as also by the union cabinet, headed by Prime Minister Narendra Modi.

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