The Plan for Air India
The flag carrier for India has gone through a turbulent time during its time as a nationalized airline to its privatization of the airline. There is some newfound hope about the revival of the airline with the owners of the TATA Group taking control of the airline
History:
This was an airline founded by the TATA group in the 1930s, meant to serve as another commercial airliner. However, after its nationalization in 1953, things went south.
The company grew, having various “first flights” for different trips, and with different airplanes. It was also merging with many other entities and becoming a more powerful organization in the airline industry. Yet, its financials were not looking too good.
The company kept accruing more and more losses. By 2009, the company reported a 72 billion rupee loss or $900 million loss. By 2011, that number escalated to 220 Billion INR or $2.8 Billion Dollars. By then the company had a total debt of 426 Billion INR and sought for 429 Billion INR.
The Indian government has tried to resolve the conflict by funding more money to the airline, and the airline has tried to move their hubs, shut down certain airplane routes, and sell some of their fleet but it was all to no avail. They almost lost their Star Alliance invitation!
By that point, it was clear that reprivatization was key to the survival of the airline, and in 2017 the Indian Government took steps to decide how to carry out the reprivatization. Ultimately, the airline was finally sold back to the original owners, TATA Group by 2022.
Causes: A variety of factors contributed to the staggering operating losses of the company. There was corruption in the company with some people charged for embezzlement of company funds. Others claim that the cause was due to poor financial decisions, such as merging with other airliners despite the mounting operating losses. The other factor could be that the government was mostly operating the airline, and the airline had to rely on inefficient, slow, bureaucratic processes to function as an airline.
The Next Steps: With TATA Group regaining control of Air India, this is hope for its revival. The company has made some ambitious moves.
The company ordered 210 a320neos, 40 A350s, 190 737 Maxes, 20 787–9s, and 10 777–9 aircraft — the largest aircraft order in history. They have also started hiring more crew with 4200 new pilots, and 900 pilots. TATA group also bought Vistara and plans on merging Air India, AirAsia India, Vistara, and Air India Express together.
The company announced a 5-year phase plan called Vihaan.AI to help boost the airline’s dominance in the airline industry. It will be interesting to see what happens to the airline after 5 years with TATA back with the reins.
