Air India, India’s flag carrier, has been sold to Tata Group. The Indian government has pledged 100 percent ownership to the Tata group.
The government had called for tenders a year and a half ago, intending to sell a 100 percent stake of Air India as it was finding it challenging to sustain losses.
The Tata group has managed to buy the airline by bidding more in the competition.
The Tata Group had handed Air India to the government 68 years ago, has regained ownership. According to the agency, Tata had pledged Rs 3,000 crore more than the price set by the government, while Spice Jet had promised Rs 5,000 crore more. At the same time, the Indian government will sell a 50 percent stake in its Air India Sets (AISATS).
A committee comprising Finance Minister Nirmala Sitharaman, Commerce Minister Piyush Goyal, and Aviation Minister Jyotiraditya Scindia was formed to sell the flag carrier. According to sources, the valuation of Air India is 20,000 crore Indian rupees. The deadline for the Air India auction was September 15.
According to a statement prepared by the agency, the company’s head office in Mumbai and Airlines House in Delhi are also included in the sale of Air India. The Mumbai office is worth more than Rs 150 crore. Air India has been managing 4,400 landing parking slots in India and 1,800 outside India.
The government had called for applications to sell 76 percent of Air India in 2018 due to high debt. At that time, the government had said that it would manage Air India itself. It was decided to sell all the shares of the company after no one showed interest in buying.
The process was started in 2000 to sell the company, which was preparing to sell at a loss. As it was the national flag bearer, it was operating with the help of the government. Governments have been faced with the question of why not privatize when they cannot make a profit.
When Atal Behari Vajpayee’s government invested in various companies, including Mumbai’s Center Hall, it was decided to sell 40 percent. Apart from this, 10 percent share was to be issued to employees, and the remaining 10 percent would be given to domestic financial institutions. The government said it would keep the remaining 40 percent.
Sitaraman, the finance minister of the Modi government, has said that there should be minimum participation in the four strategic areas of the government, keeping in mind the security of the nation. She said the government needs to own businesses in nuclear energy, space, defense, communications, and finance.
“The government is preparing for a significant policy change. We say that the government should not fully own the business sector. Privatization is the first option for this, ‘she said.
Air India’s debt has reached more than Rs 384 billion. The government had planned to sell its shares within the first or second quarter of 2021 as the company could not afford it further.
In December 2020, India’s Civil Aviation Minister Hardeep Singh Puri had decided to finalize the sale of the company by last March. But due to Covid, the process could not move forward.
Tata Group started Air India 68 years ago
Air India was established in 1932. It was started by Jahangir Ratanji Dadabhai Tata. He was the captain and the first license holder pilot at the time. At that time, the company was named Tata Air Service.
The airline, which operated domestic flights until 1938, was handed over to the government after World War II. The government bought the company after India became independent.
Tata has returned ownership of the company to their own family after 68 years. Air Asia India and Vistara Airlines have a majority stake in the Tata Sons Group.