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The debt ridden Maharaja signs off : Tata Sons beat SpiceJet promoter to bag Air India
It also marks the first privatisation of a government-owned company since 2003
Oct. 8: Minutes after the government announced that the Tatas have emerged victorious in the bid to take over the debt-ridden airline, Ratan Tata, Chairman Emeritus Tata Sons twitted, “Welcome back, Air India.” “The Tata Group winning the bid for Air India is a great news. While admittedly it will take considerable effort to rebuild Air India, it will hopefully provide a very strong market opportunity to the Tata Group in the aviation industry,” Ratan Tata said. This marks the return of Air India to Tatas’ folds. Tatas had founded the airline before it was nationalised.
Founded by JRD Tata as Tata Airlines in 1932, the airline became a nationalised company and was renamed Air India after the World War II. The Indian government bought its 49% stake in 1948 ad renamed it Air India International. It then bought the majority stake in 1953 from JRD Tata.
Welcome back, Air India 🛬🏠 pic.twitter.com/euIREDIzkV
— Ratan N. Tata (@RNTata2000) October 8, 2021
The Indian aviation sector opened up for private participation in 1994 after the Air Corporation Act of 1953 was repealed. With this, private entities entered the industry by the end of 1994-95 and started offering cheaper tickets to passengers. Reportedly, Air India with its premium services started losing market share to cheaper alternatives. In 2007, the UPA government merged Air India and Indian Airlines.
After repeated failed attempts to sell Air India, the government decided to sell 100% shares to attract more bidders. The government received bids to buy the airline from the Tata Group and SpiceJet’s founder Ajay Singh. Tata Sons won the bid for national carrier Air India with a 100% stake in it outbidding consortium led by SpiceJet. Tata Sons had made a financial bid of Rs.18,000 crore in September, while the Singh-led consortium made a bid of Rs.15,000 crore.
A group of ministers comprising Home Minister Amit Shah, Finance Minister Nirmala Sitharaman, Commerce Minister Piyush Goyal and Civil Aviation Minister Jyotiraditya Scindia cleared the winner on Oct. 4 after the bids were submitted on Sept. 15 and opened 14 days later. It also marks the first privatisation of a government-owned company since 2003. The government had last sold Balco in 2001 and Hindustan Zinc in 2002, which ran into controversy.
