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Tata acquire Air India for 18,000 crores: JRD Tata


Tata acquire Air India for 18,000 in a bid on October 8th, 2021. Finally, after 68 years TATA is getting back its soul company Air India from the government.

Air India has divided into three subcategories as Air India, Indian Airlines, and Maharajah. These three subcategories carry out International and Domestic services accordingly.

TATA sons a subsidiary of TATA Pvt ltd has now taken a 100% stake in Air India. Now, out of 18,000 crores, 15,300 is debt to be paid by the winning bidders as loss made by Air India.

Another 2,7000 crores of money will be going to the government. In reality, the government has to face a loss of nearly 28,844 crores.

Amit Shah, Home Minister of India made an announcement of the winning title of the bidder TATA sons on October 4th, 2021.

Once, JRD tata was the founder of Air India then the government to over control after independence. Then the government mismanagement of the company led to the loss and downfall of Air India.

So, this is the intention of the TATA sons to acquire the loss-making Company. Air India was a reputational company during those times. Even emotional feelings and attachment lead to the acquisition of Air India.

In the future, TATA group will be busy rebuilding the prestige and reputation of its firm Air India.

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Story Behind TATA group and Air India

There is an emotional feeling on why Tata acquire Air India even though it is a loss-making company.

The story starts in 1932 with the iconic character Jehangir Ratanji Dadabhay Tata( JRD Tata).

JRD Tata was an Aviator born and bought in France. He was passionate about Airlines and also had desires to build innovative products in the respective field.

Once, JRD Tata’s friend Nevel Vincent came with an innovative idea. Where he gave an explanation about the inconvenience of the foreigners to reach India. 

In reality, for any traveler to reach India, initially they have landed in Karachi, Pakistan, and then they have to travel by train to reach India.

So, Nevel Vincentt’s concern is to make out a business plan over the existing problem. As there was no Airlines connection in India, so he found that it is the best time to crack out a solution.

Then, JRD Tata also shown his interest in building Air line connection between Karachi and India. Further, JRD Tata met his friend Louis Bleriot a France Pilot. He had done a lot of achievements during the 1900s. Louis had been entitled to drive 17 flights in his lifetime.

The duo, JRD Tata and Louis Bleriot thought and made several plans to start the business. They were discussing the strategies for building the Airlines system.

Eventually, in 1932 JRD Tata started the company called Air Mail. Even the first flight that drove between Karachi and Mumbai was no other than JRD TATA.

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Rise of Air India (the story behind Tata acquire Air India)

Then, the Company Air Mail never turn back from its successful journey. Air Mail was the first company to make an airlines system from Karachi, Mumbai to Chennai.

Gradually, the company started to gain trust and reputation from the people. Even its first-year profits were nearly INR 64,000. Then the profit trajectory en En route towards the sky. For the next 5 years, the company made a profit of 6 lakhs.

After the huge success, JRD Tata thought about expansion in its services. Then the Air Mail company started the domestic services within the country. Even, Thiruvananthpuram also gets airlines connectivity.

Then the company name was changed several times. Initially, the company was renamed TATA Air Services and then TATA Air Lines.

Finally, the company lists to IPO in 1964 and was renamed Air India.

JRD TATA’s qualities

Air India airlines had got so much reputation over the years is just because of the JRD TATA. He is a very humble and down-to-earth person. Even the always works toward the success of the company. 

There were so many instances where JRD Tata got a lot of respect from society. One such incident took place in the airport, where the JRD Tata was cleaning the table at the restaurants. All the people were shocked to see the owner of Air India with such gestures. 

As JRD Tata always gives importance to the ethics of his company. So, he went to clean the grimy table on his own. So, this shows the JRD Tata’s passion and dedication towards his work.

Even there were instances where he cleaned the toilets at the airports. These all incidents had a huge positive impact on Air India. People start building trust in the company.

The downfall of Air India

Everything was fine until the firm was running under the leadership of the JRD Tata. After the independence of India, many policies were framed to control the airlines.

In 1948, a law stated that no airlines should 100% privatization and there should be involvement of the government. Then government snatched the 49% of the stake from their harsh policies.

Further, Air India witnessed a series of failures and declination. In 1978 there was a crash of Air India. As a result, the disaster took more than 200 lives.

Then the Prime Minister Morarji sued JRD TATA from the chairman post. Further, the humiliating factor was the JRD Tata was not informed about his devaluation. As he got to know the news from the public. This incident hurt Tata severely.

Then top official of Air India made a resignation from their post. Even pilots and employees made a lot of protests against the incident. But there was not a positive impact.

In Indira Gandhi’s rule, again JRD Tata was re-appointed as chairman of Air India till 1986. After the 1990s there were a lot of losses incurred by the company.\

As Air India was part of the government, the politicians and officials utilizing the airlines as their assets. No one was accounting for the expenses of the government officials made during the travel. As the boat was heading with no direction.

The on-time performance of Air India went from 91.4% to 71.9%. On-time performance means the accuracy level maintained by the company. 

To control the losses Air India got divided into different categories. The firm got divided ad Indian Airlines and Air India. They both took international and domestic services respectively.

Further, Indian Airlines was profitable and Air India was at losses. To make the matter worse, Minister in charge purchased 111 new airplanes for Indian Airlines worth 50,000 crores.

This action submerged both firms in losses. As the total worth of Air India was only INR 7000 crores. Due to the inefficiency of the government and politicians made Air India is losing making company.

Tata acquire Air India from the government bid


As the losses, started to rise exponentially year on year. So, the government decided to sell the company. As of now, the losses in total were over 60,000 crores. In order to recover the losses. There was a lot of opposition from the parties for many years.

Finally, Tata acquire Air India for 18,000 crores in 20201. Now TATA groups will strive in rebuilding the JRD Tata reputational company.

Now, the TATA group has 84% and 51% stakes in Air Asia and Vistara respectively. 

So, the TATA group might work by collaborating with Air India. As Tata acquires Air India is good news for the firm and to grow as a great company in the upcoming years.

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