Tata Group, Singapore Airlines Move Closer To Make Joint Bid For Air India


Tata Group, in partnership with Singapore airlines, is moving close to a decision to bid for the Air India put up for sale by the government, reports Economic Times.

Additionally, the reports mentions that such an acquisition proposal is on the anvil, which also includes a merger of AirAsia India, in which they hold 51 per cent, and Air India Express, a 100% subsidiary of the Air India.

JRD Tata founded Air India (AI) 87 years ago, but was then forced to relinquish control of the airline company over nationalisation of the carrier. If Tata re-acquires Air India, it will be 66 years after its nationalisation.

Notably, Tatas also operate Vistara as a 51-49% Joint Venture with Singapore Airlines. They also hold 51 per cent in AirAsia India, a joint venture between Tatas and a Malaysian entrepreneur named Tony Fernandes who holds the remaining 49 per cent, which took to skies in 2013.

As per the report, the Tata Group has approached Fernandes for his approval to acquire AI Express as the shareholders’ agreement stipulated that Tatas can’t invest more than 10 per cent in another budget airline without Fernandes being willing to waive the covenant.

The Tatas are proposing to combine AirAsia India and AI Express, in lieu of the waiver.

Earlier, Tata Sons Chairman N Chandrasekaransaid had said, “I’m not going to run a third airline (in addition to Vistara and AirAsia). Unless we merge. There are issues. I will never say yes or no. I don’t know.”

The government has been looking to exit Air India completely in contrast to the earlier plan to of retaining a minority 24 per cent. But it seems the government has learned its lesson when it attempted to disinvest 76 per cent in AI and the interest was more than lukewarm. Also, the last date to submit an expression of interest for Air India is 17 March.

Tata Sons set up Tata Airlines in 1932 with JRD Tata at the helm and it became a public company and was renamed Air India.

In 1953, Nehru nationalised Air India “through the back door”, as Tata himself put it and during that time it was one of the best airlines in the world. Tata wrote to Nehru: “I can only deplore that so vital a step should have been taken without giving us a proper hearing.”

Tata become the nationalised airline’s chairman and under his leadership Air India kept on doing well until he was removed in 1977 by then Prime Minister Morarji Desai.