Tata faces the challenge of reversing losses of two airlines

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By: Narvijay Yadav

Tata Sons’ dominance in India’s air travel business is set to increase with the decision of buying 100 per cent ownership of Air Asia India. It has already bought Air India recently. But, the company has to face a big challenge of meeting the losses of both the airlines. After the return of Air India in its house, the Tata group owns a total of four airlines comprising Air India, Air India Express, Vistara and Air Asia. Civil aviation experts are of the view that Tata should split its four airlines into two separate groups instead of bringing them under one umbrella. Air India and Air India Express could be in the first group, while Air Asia and Vistara in the second group. Both the companies should have two different CEOs, so that they can have a healthy competition among themselves.

Meanwhile, there is a buzz that the Tata Group is going to acquire total ownership of Air Asia India soon. Air Asia is a joint venture between the Tata Group and Air Asia Berhad. Tata has decided to buy the remaining 16.33 per cent stake in Air Asia. Tata currently holds 83.67 per cent stake in this joint venture. After paying around Rs 140 crore, Air Asia India will be completely owned by Tata Group. However, Air Asia has been making losses for the past few years.

There was also a buzz that a change in the name of Air India was being considered. It would be better if the name is not changed. Even though Air India became a loss-making airline with huge debt under its belt and a negative image in the market, the world is well aware of the name. For several decades, this leading airline of India had the distinction of being the best airline in the world, a status later snatched by Singapore Airlines. It is another matter that Air India has been instrumental in providing high level training to the staff of Singapore Airlines.

During the previous governments, Air India became a victim of red tapism and VIP culture. The condition deteriorated so much that till some time ago, Rs 20,000 crore was given to it every day from the government treasury. That is, the Maharaja’s flights were running with the public money. For the Tata group, this airline will prove to be either a big challenge or a big achievement. With the deal, Tata has got more than 125 airplanes, valuable slots at airports in the country and around the world, along with the well trained pilots, air hostesses and other staff.

With the fear of Corona decreasing, the number of air passengers in the country has gone up. In the month of October, there has been a growth of 25.88 per cent in the booking of domestic flights on an annual basis. According to the Directorate General of Civil Aviation (DGCA), there were 4.93 crore bookings in October 2020, which increased to 6.21 crore in October 2021. On a monthly basis, there has been a growth of 70.46 per cent in domestic air travel bookings in the month of October as compared to September. The cancellation rate in October was around 0.82 per cent. (The author is a senior journalist and can be reached at [email protected])

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