Tata to Likely Emerge Victorious for Air India, Ex-Director Says
(Bloomberg) -- Tata Group will likely get the government’s nod to take control of money-losing Air India Ltd. considering the nation’s largest conglomerate is capable of pouring large sums into the flag carrier and revamping it.
That’s according to former Air India director Jitender Bhargava, who said in a Bloomberg TV interview Wednesday that Tata Group has the funds and wherewithal to revive it.
“Tatas have been very, very passionate about Air India,” Bhargava said. “J.R.D. Tata on record has said that this is his only creation, rest of the Tata companies came to him and he was only managing them. So there was a lot of passion, lot of emotional connection between Tatas and Air India, and that has made them bid for it.”
Tata Sons Ltd., the group holding company that controls Jaguar Land Rover and owns a majority stake in AirAsia India, submitted a bid for Air India earlier this month. The other bidder is SpiceJet Ltd. owner Ajay Singh in his personal capacity. A recommendation on which party should be the victor is expected this week, possibly as soon as Wednesday.
Air India, originally called Tata Airlines, was established in 1932 by the legendary industrialist and philanthropist J.R.D. Tata, who was also India’s first licensed pilot. It was nationalized around the time of India’s independence in 1947.
The government shouldn’t hope for a large sum of money and must take a “pragmatic view” in selling Air India because keeping the ailing flag carrier would mean straining state finances year after year, Bhargava said.
“When the government acquired Air India, they gave Tatas a pittance. There’s no rationale for the government of India to start looking for huge sums of money as compensation,” he said.
Bhargava also predicted that the sale will inevitably meet with political backlash. There will be allegations that the government is “selling family silver, they’re selling it cheap,” but the best course would be to return the airline to Tata, he said.
Any new owner will have to upgrade the interiors of Air India’s fleet and shake up a government-minded culture, Bhargava added.
“If you look at the last 18 years, they’ve put at the helm of Air India bureaucrats with virtually no knowledge of the aviation industry,” he said. “It was just a matter of keeping the airline going rather than ensuring that Air India is injected with new talent and the network is expanded. We have often said stagnancy is the first sign of decay.”
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