Form of words:
TeaThe Covid-19 pandemic has been ominous for the aviation industry across the world. As normality returns, the journey has returned, becoming a ray of hope for all the players involved. But the sun is shining brightly on Tata with the return of Air India to the group after 68 years.
The privatization of the national carrier has been a long process going on for more than two decades. While many have argued that Tata has got back the national carrier for groundnuts, all have long celebrated homecoming.
SpiceJet’s promoter Ajay Singh overtakes salt-making software group emerged As the successful bidder in the privatization process, where the Narendra Modi government sold Air India for Rs 18,000 crore. In addition, Air India Assets Holding Limited (AIAHL) is now Capture 75 per cent of the debt of Rs 61,562 crore, with the Tata group only Rs 15,300 crore.
Columnist Andy Mukherjee said, “The carrier was the epitome of all that can go wrong when a state lacking the capacity to deliver basic services such as health and education begins to compete in the commercial sector.” wrote.
Due to poor service and poor management due to its exploitation by politicians and bureaucrats, Air India had earned a bad reputation. It is no longer the first, or second, or third, option for many customers. But with its return to Tata, there are high hopes and danger for IndiGo, SpiceJet and other players. And that is why Air India is ThePrint’s Newsmaker of the Week.
Read also: Privatization of Air India came two decades late, but taxpayers get relief
Tata becomes a big challenge
It remains to be seen what Tata will do with the four airlines they now own – Vistara, a full-service carrier with Singapore International Airlines, and Air India and Air India Express plus low-cost carrier AirAsia with 84 per cent stake. share is. Including all four, the fleet size has now increased to 221, with a range of aircraft from the Airbus 320 to the Boeing 787-9 Dreamliner.
While this figure is lower than IndiGo’s 247, it is now the only fleet to fall in the same margin as the country’s largest airline. CEO Ronojoy Dutta has said that IndiGo is a “very good airline”, acknowledging the change in competition with the Tata acquisition of Air India. “(A new) Air India – that is the real challenge for us,” he said. “They will compete hard. I see him as a tremendous force,” he said.
The disruption in the aviation industry comes at a time when travel is making a comeback in the backdrop of rising fuel prices. While it would be a treacherous journey to rebuild Air India in this environment, other airlines now face stiff competition with Tatas. holding Combined market share of 26.7 percent. Analysts Accept SpiceJet is ready to take a bigger competition than Indigo.
However, international airlines are also at risk from this sale. with Air India 55 With exotic destinations, lucrative international routes, Star Alliance membership, and over 3,000 landing and parking slots, it has the potential to prove tough competition to airlines like Emirates, Qatar and Etihad, which have entered India’s international market. has done.
in one Interview To moneycontrolEmirates President Tim Clark said that if Air India is able to develop “a business model that is meaningful and brings value to new shareholders and to India, then the scope and scale of that airline is endless. And that’s what they need to do.” is needed. Will it affect us? Surely it will.”
Dutta also expressed similar concerns. “Internationally, they will be a strong competitor,” he said.
On one hand, success in India has been discussed about Mukesh Ambani and Reliance. he enjoys now company Elon Musk and Jeff Bezos are in the $100 billion club. Tata Group, on the other hand, continues to make losses on Corus Steel and Jaguar Land Rover in Europe. Vistara paints a similar picture on the business end of things.
However, the group continues to be the most trusted group (66 per cent of the vote), beating the AV Birla Group (5 per cent) and the Mukesh Ambani Group (4.7 per cent). recent The survey was conducted by Equitymaster, an independent equity research firm.
With Air India back in the pocket, the Tata Group now has an opportunity to strengthen its other companies – just like it did with Vistara and AirAsia – by supplying products to the airline and “cross selling Products for Air India customers and airline crew.”
Read also: Should Indian Railways be privatized to stop it from going the Air India route?
Fast-Tracking Personalization
The national carrier’s two-decade-long sale is a test case for India’s privatization program and it hasn’t been easy.
In 2001, it was a disinvestment proposal where the Atal Bihari Vajpayee government would control more than half the equity, but there was no taker. The Modi government first tried to sell it in 2018, where it offered 76 per cent equity but to no avail. Finally in January 2020, the government put its entire share on the block. Nevertheless, it has proved to be a monumental work.
“Modi’s goodbye Maharaja – the airline’s mascot – will strengthen his government’s reform credentials at a time when the economic recovery from Covid-19 is still tentative and uneven,” Mukherjee said. wrote.
The sale of debt-ridden Air India amid the global pandemic will now boost confidence in the privatization of other PSUs. Tuhin Kanta Pandey, Secretary, Department of Investment and Public Asset Management, said: “Certainly, there will be an uptick as the bidders will get more confidence in the government’s ability to close the transaction.”
Now that the Modi government has proved its willingness for economic reforms, it may accelerate the privatization of many other PSUs.
Thoughts are personal.
(edited by Prashant)
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