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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.