Under terms of the deal, Tata will gain Air India’s 141 aircraft and 7,000 domestic and international airport slots and pay $1.2 billion toward 42 aircraft, many of them Boeing 787 Dreamliners.
Indian conglomerate Tata Group acquired money-losing national carrier Air India in a $2.4 billion equity and debt transaction. Tata subsidiary Talace Private also acquired Air India Express and a half interest in Air India’s airport-servicing and cargo-handling business, Air India SATS.
For 13 years, successive government’s bid to privatize the state-run airline did not materialize, owing to political disagreements and opposition from airline unions.
After 68 years, Air India returned to its roots; it was founded by JRD Tata as Tata Airlines in 1932. The Indian government purchased a 49% interest in the company in 1947 before nationalizing the airline in 1953.
Under terms of the deal, Tata will gain Air India’s 141 aircraft and 7,000 domestic and international airport slots and pay $1.2 billion toward 42 aircraft, many of them Boeing 787 Dreamliners. Air India will continue to operate under the same name.
In other aviation news, Italia Trasporto Aereo became Italy’s national carrier after a $3 billion investment and ceasing to operate as Alitalia on October 15. SwissAir, which went into oblivion in 2002 following liquidation, reappeared as Swiss International Airlines and then merged with German airline Lufthansa in 2005.
Eventually, Tata may consider synergies and merge Air India with its premium Vistara Airlines, and Air India Express with rival AirAsia in the budget air-travel segment. Tata officials say the company will avoid overlap so as not to cannibalize each carrier’s business.
For now, Tata Group commands a 25% share in the Indian aviation market, which is on its way to becoming the third-largest globally, with passengers spending an estimated $136 billion on travel by the end of the year.
Tata’s takeover of Air India is expected to lead to a churn in the Indian aviation market and present opportunities for foreign players. According to government estimates, the Indian aviation industry may attract $4.99 billion in foreign investments in the next four years.
