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Air India – Rising and Reconquering

Air India. This airline has had a rollercoaster of a ride. From highs in the 1980s to one of the most unprofitable airlines in the world today. What does the future hold for this behemoth and all its subsidiaries? Let’s take a trip down memory lane.

Headwind: Air India is one of the oldest airlines in the world!

The past:

  • The airline was founded by J. R. D Tata all the way back in 1932 as Tata Air. The first flight was carried out by the legend himself, and the rest is history. The airline grew remarkably from its humble origins to a stage where in 1953 the government of India purchased the airline and re-named it Air India.

  • The airline had always been a trend setter in its early days, becoming the first Asian airline to induct the Boeing 707, the first jet-airliner in the world. In fact in 1962, Air India became the first airline in the world to become an all-jet engine airline, no longer relying on the previous generation of noisy and inefficient propeller aircrafts.

  • In 1978, JRD Tata was removed as Chairman of both Air India and Indian airlines by Morarji Desai. This was when the rapid downfall of the airline began. By the time he was reinstated by Indira Gandhi back on the Board, the avalanche of mismanagement had begun.

  • Very rapidly, the cracks started to emerge in the management and structure of the airline. In the early 2000s, rampant with corruption, attempts were made to re-privatize the airline – which fell through. In 2004, the low-cost arm of the airline, Air India Express, was set up, to connect tier cities and make available international low-cost travel.

  • In 2005 Air India placed a record-breaking 10.8 billion dollar order with Boeing Industries for a mammoth number of aircraft. An aggressive expansion plan was put into action and in 2007 Indian Airlines was merged with Air India and a new company, Air India Limited was established. And that’s when things started spiraling out of control. A shabby merger and an astronomical order caused immense strain on the airline's books.

  • Added competition from the emerging robust and ever-expanding low cost market added to their woes.

  • After several attempts, Air India successfully joined Star Alliance in 2014 in an attempt to improve its place in the large international market.

Headwind: Singapore airlines, widely regarded as amongst the best airlines in the world, was set up after consulting Air India and replicating its pioneering, innovative practices!

The present:

  • According to economic times, the debt of the mismanaged airline stood at Rs. 61,562 crores as of August 31st, 2020. Several management decisions, overstaffing and loss making routes have contributed to this gargantuan figure. To put things into perspective, Jet Airways had a loss of approximately 8000 crores when it closed shop.

  • During the initial days of the pandemic, the airline played a pivotal role in repatriating Indian citizens stranded abroad and formed crucial cargo linkages.

  • The once royal Maharaja, the pinnacle of the India skies is now on life-support. The growing losses over the last decade have prevented expansion and on several occasions aircrafts were unable to be put in service because the airline didn’t have enough cash to pay for spares.

  • The airline is the largest international player in India, and especially after the closure of Jet Airways, Air India has become the crucial linkage between the world and India.

  • The attempt to privatize the airline in 2021 has finally succeeded, after two failed attempts over a span of almost 20 years. This time around the government has sold off the airline in its entirety, including its subsidiary Air India express. Tatas have taken over the airline with a winning bid of Rs. 18000 crores along with a portion of the ginormous debt that is associated with the airline.

The future:

  • The Tatas have an opportunity like no other, with three airlines in India now coming under their control. AirAsia India, Vistra and Air India, Tatas will have the second largest domestic market share behind Indigo and a monopoly in long-haul international travel.

  • Tatas will formally take the reins sometime in December 2021. This will give the company enough time to make the transition while negotiating with the unions and planning their future.

Interesting features by Air India:

  • The airline entered the Guinness Book of World Records for the most people evacuated by civil airliner. The operation was carried out during the Persian Gulf War to evacuate Indian expatriates from Kuwait and Iraq. Over 111,000 people were evacuated from Amman to Mumbai, a distance of 4,117 kilometres (2,558 mi), by operating 488 flights from 13 August to 11 October 1990 – lasting 59 days.

  • Even today, it is the only airline in India that offers 25kgs of check-in luggage.

  • Air India has been responsible for the safety of VIPs in the country, since its inception. Air India 01 is the designation given to the aircraft flying the prime minister.

The need for the privatisation was one which has been understood and rallied for by many in the industry. While it made sense to have a nationalised airline back in the 1970s, in the new century, that is no longer the case. Without the shackles of political bureaucracy or the need for the fares to be highly subsidised, the sky is Air India’s to recapture.




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