Tata may be providing Air India with capital and even more desperately needed good management
Tata, who died in 1993, frequently said that his job at Air India was to protect the airline from the central government in Delhi. No doubt the sentiment contributed to his sacking—and was justified. After his exit the flag-carrier entered a spiral. In recent years it was losing nearly $3m a day. Operating costs far exceed the industry average. So do customer complaints.
Given what has unfolded in India’s aviation since J.R.D.’s inglorious dismissal, it is not entirely unfair to conclude the government did Tata Group a favour by taking Air India off its hands. Private carriers have emerged only to go bust. Covid-19 travel restrictions have caused the industry to wallow in losses. Indigo, the most successful carrier with a market share of 57%, is embroiled in litigation between its founders and has ejected multiple top executives.
Still, Tata’s move is not without reason. Its current management sees its existing aviation operations as irredeemably subscale. The deal will double Tata’s domestic market share to 27% and give it a platform for growth through Air India’s network of landing slots abroad, particularly in London and New York. Air India owns a low-cost airline based in the state of Kerala that does a booming business ferrying Indian workers to and from the Persian Gulf, and could dovetail with AirAsia India.
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