[v1p3r]

I don't have a good feeling about this.

AI, as we know it today, is the merged entity consisting of the old Air India and Indian Airlines (IC). AI was a front-runner at the time of its inception, and much after, to the point where Cathay Pacific and SIA were modelled after it. AI also made profits well into the 2000s.

IC, on the other hand, was set up as a sarkari unit, and absorbed private airlines in the 50s. It was as much of a joke in terms of customer experience and service as any other Licence Raj enterprise.

The profitable AI and the largely incompetent IC were forced to merge, and take multiple disastrous decisions - purchases, giving up precious landing slots, flying rights - by a former aviation minister and his friend, the king (lol) of good times. This effectively ran the company into the ground, and made AI a byword for incompetence.

In his haste to reclaim JRD's beloved, RNT seems to have taken on the burden of a mismanaged domestic carrier. I won't be surprised if the sales clauses include them forced to fly unprofitable routes to serve the needs of the country - something that only a PSU would ordinarily do. Added to that, I am certain that the IC lot will take it upon themselves, as a point of pride, to throw as many spanners as they can find into the works.

All this, of course, assumes that the Tatas do get AI.

[twinblades]

Originally Posted by V.Narayan

I'll put my $ on the Adani Group.

That would have be funny however I doubt it because I saw it's just Spice-jet and Tata who are the finalist.

[Anikesh11]

IMHO buying air India might be a wrong decision for Tata group which already has 51% stake in 2 airlines in India
Full service airline business is very risky in India
Ratan Tata has fondness for high profile sectors like steel, cars, telecom and airlines which has translated into some horrible acquisition/JVs in past, this seems to be following that trend
Would be worrisome for profit making companies of tata group who might end up carrying this white elephant

[samaspire]

Originally Posted by V.Narayan

Air India did not deserve to be nationalized in the first place in 1953.

Today is another red letter day.

What a wonderful post Sir. You truly are the Wikipedia of Indian aviation information. What you have put across so brilliantly in not available anywhere, so well explained.

I really hope Tata finally does end up with the bid despite all the backroom dealings currently going on. I have a feeling that this info was purposely leaked early to preempt a coup by one of the big A's.

[for_cars1]

Originally Posted by COMMUTER

...when the necessities like buses, hospitals, postal service, electricity are to be privatised it is a different picture. They, the private investors, will be keen on the profitable portion of these services only. ....

Time and again, history has shown that the State run business will end up in huge corruption, bureaucracy, lack of efficiencies and loss making ventures.

Just to give an example: The privately run local buses in Mangalore have been an excellent example of efficiency and convenience for a long time - buses are always within reach.

Just compare it with the lethargic state run Bus service in Bangalore which is next to useless in terms of convenience, frequency or service and running on losses on top of that. The solution: Just introducing private bus service players in Bangalore will bring in huge improvement in local transport.

[V.Narayan]

Originally Posted by DigitalOne

Has Tata been compensated in a roundabout way for taking on the burden of AI :-) ? Hint: military aircraft

I doubt. The bids for Air India would have been submitted months before the CN-235 decision. The CN-235 decision has got fast tracked {if one can call it that} due to the worsening defense situation with China and our own fleet of transports having reached beyond their end of life status.

Originally Posted by r_nairtvm

There's substance and what you are saying, makes a lot of sense. Further Tata vehicles division has become almost the "sole supplier" of vehicle requirements of Indian Army - another way of compensating

I didn't know that. Last I read the Army buys and uses vehicles of all sorts from Tata, Ashok Leyland, Maruti, M&M, BEML, Vehicle Factory Jabalpur, Ordnance Factory Board Medak, Swaraj Mazda etc. If you have facts to the alternative please share them.

Originally Posted by twinblades

That would have be funny however I doubt it because I saw it's just Spice-jet and Tata who are the finalist.

The question put was who is a likely financial backer to Ajay Singh. The response was in that context. It is likely (just my conjecture) that Spicejet were asked to stay in the fray to retain this as a transparent bid.

Originally Posted by samaspire

I really hope Tata finally does end up with the bid despite all the backroom dealings currently going on. I have a feeling that this info was purposely leaked early to preempt a coup by one of the big A's.

In such situations it is not unknown for the bidder and the Govt to quietly agree on a media management strategy to foil trouble makers. Not sure how it works but as consumers of newspapers we've seen this before.

I'm happy that the cash guzzling of tax payers money will hopefully stop if the bid converts to a contract and the sale actually happens. As a consumer and tax payer I'm more concerned with PSUs like Air India not being bottomless pits of my money than whether Tata's can run it profitably. So long as Tata's can improve the service and offer a wider choice to consumers I'm ok with it. They will need to do an IPO at some point in the medium term future to fund growth and early stage cash losses. The bigger signal is that this Govt seems to be serious about PSU privatization - hopefully IMHO, others may differ.

How Tata's work out their strategy of three carriers is to be seen. There are are too many combinations of what they could do but given the HR issues at Air India I guess it will unfold only gradually over 3 years. They will end up with two full service domestic + international carriers {Air India and Vistara} and one low cost carrier {Air Asia India}. How the position the products and pricing will be interesting to watch. As @v1p3r puts it the Tata's have pushed for this with some emotion of getting the family silver back.

For the interest of aircraft lovers - photo below of a table top scale model of the Malabar Princess, Air India's and India's first international airliner, a Lockheed Constellation 749.

[twinblades]

Originally Posted by for_cars1

Time and again, history has shown that the State run business will end up in huge corruption, bureaucracy, lack of efficiencies and loss making ventures.......... The solution: Just introducing private bus service players in Bangalore will bring in huge improvement in local transport.

For the longest time Bangalore bus and Karnataka bus transport department where the only profit making govt trandport departments in India. I haven't personally tried Mangalore bus service but I would always be cautious against privatisation because if you see the Kerala private buses, they are a case study on how scary things can get.

[torquecurve]

Originally Posted by r_nairtvm

There's substance and what you are saying, makes a lot of sense

Further Tata vehicles division has become almost the "sole supplier" of vehicle requirements of Indian Army - another way of compensating

Best Regards & Drive Safe

I seriously hope you meant this as a joke! Because it’s a load of _nonsense_! (Don’t need an infraction now do we!)

The Forces procure from multiple manufacturers. In fact the medium truck of choice is the veritable Stallion family (AL). Recently Force motors supplied some special forces vehicles, Mahindra has numerous vehicles in the small category that the forces use. In fact - the Army Ambys were replaced by SX4 and then Ciaz. If referring to the GS500 Safari Storme - it’s a negligible percentage of all I he armed forces vehicles

Originally Posted by for_cars1

Time and again, history has shown that the State run business will end up in huge corruption, bureaucracy, lack of efficiencies and lossless making ventures.

Just to give an example: The privately run local buses in Mangalore have .

Not true in totality. While it’s easy to Diss the state run operations also note that it provides transport for the economically weak. Most state run business have turned into political tools, coupled with bureaucracy, so called ‘unions’ you have a veritable mix of things that can go wrong.

When we have a good leader cutting through this it can make a difference. Case in point Delhi Metro, Konkan Railways, BEL, BHEL, Etc.

Privatisation sounds easy - but will create issues for the lower income group who cannot pay unsubsidised rates for travel. Heck even the lower middle class won’t be able to pay the actual cost of a railway passenger ticket - which is otherwise cross subsidised by freight and other subsidies

[Aravind_M92]

Air India going back to its founders sure is a great news!

Air India sure was started by Tata back in 1932 as a mail service and went on to become the national carrier later in 1953, which in my opinion was a great move. India as a country definitely needs a national airline. We were and still are a developing country, which does imply that a significant amount of population has moved out of the country in search of job opportunities and livelihood. And there were always situations when state owned carriers were much needed for evacuation and repatriation. The recent Covid-19 repatriation flights were one such example. I want to share my opinion about this particular airline and how it was run. I'm not an expert here but am sharing all the views and news gathered by me that have been confirmed.

Air India was internally divided into three entities post the Indian Airlines and Air India merger in 2007:
1. Air India Limited consisting of the pilots and cabin crew
2. Air India Engineering Services Limited (AIESL) dealing with MRO, run by RAMCO
3. Air India SATS (Singapore Airport Terminal Services) dealing with ground and ticketing services

If noted clearly, the AIESL and Air India SATS were already under private holding and to the best of my knowledge, all the employees who got into PSUs need to have a strong merit background to crack the competitive exam. There may be a few recommendations, but the majority aren't that way ( I strongly feel that since all those who got in are big brains causing a lot of confusion).

The airline business is majorly dependent on how you set your slots and ticket pricing rather than how you run it. Ryan Air for example has one of the most harsh on ground experiences, but that doesn't deter people from using it. If people are happy with the flight timings and the cost, seats are bound to be full! I remember Air India having about 27 flights between Bombay and Delhi at one time. Now that role has been taken over by IndiGo, which runs about 35 a day!

The majority of us are money conscious. We are ready to sacrifice a few comforts to save a bit of money. Let me give an example. The same A320 Neo seats 189 with IndiGo and 12+150 with Air India. But if prices are to be compared, consider booking about a month earlier. They're almost the same. The difference is barely in hundreds, but people would still prefer IndiGo. For the additional price I pay, I get 25 kg of check in as compared to 15 kg, food on board and I'm able to sit properly without someone poking my back. I'm 6'1" and travelling in SpiceJet or IndiGo isn't for me.

Full service carriers will soon be out of business, at least on domestic routes. A short hop would never require comfortable seating or food on board. I do believe there'll be ULCCs (Ultra Low Cost Carriers) in the near future, which will charge for everything. Literally everything. Take Scoot for example. I still wonder how people do long hauls with them. They even charge by the hour to utilise the power sockets! Luckily, people don't need to pay to use the loo. I heard Akasa Airlines will be following this business model. Jet Airways was set as a full service carrier, ran into losses, started a low cost wing before it was too late and ultimately went down. We definitely can't compete with the middle East carriers read Qatar and Emirates in terms of cost or convenience.

Air India sure was a pioneer in the 60s to 90s periods and still is. It was the first to introduce the A321, A320 Neo and the B787, but was never advertised as other carriers did like Jet or Spice for the 737 Max or IndiGo or Vistara for the 321 Neo.

Coming to aircraft maintenance, Air India employees had to make the aircraft run with the available resources rather than the required resources. Recently there was a news about the grounding of about 20 aircrafts due to engine spares non availability. In reality it was because someone didn't get the intended tender agreement. There were also numerous cases where I've heard route slots decided by Air India being sold to private carriers.

In short, corruption at every managerial level got this airline into this state. Another blunder done was the construction of Air India MRO at Nagpur.

I remember when Kingfisher used to give out tickets at dead cheap prices. DEL -MAA used to be around Rs. 1,700, while Indian Airlines or Jet had to charge around Rs. 3,000 for the same. I used to and still wonder how that was possible. Rs. 1,700 barely covered airport handling and fuel charges, but an airline was run with it!

There were rumours that Spicejet would buy the Air India Express fleet since it would be easier to induct the B738 fleet and Alliance Air going to IndiGo for its ATR-72s.

Air India, if managed properly, which I believe will happen under Tata's management, will become a prosperous company. With Vistara planning to induct long haul flights and Air India having a healthy wide body fleet, I believe this buyout will be a great. Being a PSU, the airline has a lot of assets with it, which surely is a hidden gem. Hopefully, Air India remains the same brand with a refresh and becomes a successful model like British Airways. If not for privatisation, Air India definitely needed a management reshuffle, just like Alitalia did. Hopefully the airline gets back its former glory!

[fordday]

Originally Posted by V.Narayan

The question put was who is a likely financial backer to Ajay Singh. The response was in that context. It is likely (just my conjecture) that Spicejet were asked to stay in the fray to retain this as a transparent bid.

Ajay Singh has bid for AI in his personal capacity. Wonder who his backers are in this case.

But he has immense political clout in this regime. Some say he forced the govt to squeeze the Maran's out of Spicejet and later bought their stake at dirt cheap and became the owner once again.

Some even say he is the man who coined the slogan "Ab ki baar Modi sarkaar".

Originally Posted by V.Narayan

In such situations it is not unknown for the bidder and the Govt to quietly agree on a media management strategy to foil trouble makers. Not sure how it works but as consumers of newspapers we've seen this before.

This could be the explanation why the news was leaked.

[Cyborg]

Tata’s would never indulge in any under the table, quid pro quo or kickback activities. If they get the bid, it will be a solid deal with honesty and integrity.

Running an airline is an extremely painful business, running Air India with all it’s issues is taking that pain to the power of infinity. Tata’s wanting it back is a great sentiment, however, I hope they haven’t bitten off more than they can chew (if they win obviously).

Cheers

[sukhbirST]

Originally Posted by Sebring

I always thought the staff were as competent as the rest, the few dozen times I've flown Air India (Plz don't go by (probably biased) media reports). They just need a morale booster and a great trainer. Of all the PSU's this one will emerge stronger, I feel

Good point. In my years of flying officially with Air India, rarely faced any inconvenience in change of flight, cancellation etc. What worked in their favour was always trying to send you through other flights/ routes. Surely, you will find all types of employees in other private airlines also.

[AZT]

The details of the deal are what I'm waiting for. There will be some 2 year employee retention clause and most debt to govt retired. Also one article claimed Tata out bid Ajay Singh by 5000 cr so either they over paid or the second bid was not serious.

This could be a good long term bet if they are getting it for pennies on the pound, or a plain money pit like the Corus deal and also JLR after.

[AirbusCapt]

Before we understand who bid what, we need to understand what exactly is Air India worth? What does the airline have which makes it even faintly attractive to Tata or Ajay Singh? The 200 plus airplanes, the staff, the infrastructure etc are not attractive enough to takeover the 30/40, 000 crore asking price plus about 20,000 crore of funding to get the airline back to its feet.
Most of the aircraft and ground infrastructure are extremely old, come with unattractive leases and require heavy investment to get back to working order. The pilots are an asset for sure but the bloated ground staff and office staff are pure overheads.
What's so lucrative is the almost 4000 guaranteed slots in almost all major airports across the world. If you monetise these, they would be worth upward of 50k crores by themselves. The other thing is an immediate jump to a huge no2 in South Asia. Tata combined (AA, AAI and UK) have over 230 aircraft right now. Easily able to combat the 250+ Ifly domestically and beat out everyone else on long haul routes.

[itwasntme]

Originally Posted by AirbusCapt

What's so lucrative is the almost 4000 guaranteed slots in almost all major airports across the world. If you monetise these, they would be worth upward of 50k crores by themselves.

Totally spot-on. One of the many factors behind the doomed revival of Jet Airways (in the past avatar) was that the 'historicity' of landing slots to the 'new' Jet Airways entity was thrown out by the GoI/MCA.

Slots for Jet Airways will be based on existing norms, not historicity
https://timesofindia.indiatimes.com/...w/83236198.cms

As a result, Jet's holistic value dropped catastrophically and was then valued piecemeal rather than as a going concern.