Long Live The Maharajah!

Air India is set to return to the Tata group after 68 years. How does that impact the legacy airline? And what does it mean for the competition and Tata’s own existing aviation business?

- Ashish Sinha

THE HAMMER HAS FINALLY come down on the sale of India’s national carrier Air India, the national carrier that is euphemistically also known as the Maharajah. Palace, a fully-owned affiliate of Tata Sons emerged as the “successful bidder” for the sale of equity shareholding of Air India and its subsidiaries.

On October 8, Tuhin Kanta Pandey, Secretary, Department of Investment and Public Asset Management (DIPAM) merely confirmed the sale when he made the announcement since everyone seemed to know everything about the sale for weeks. What Tata Sons was going to win the bid for Air India was a no-brainer given the emotional connection of Tatas with the airline and the fact that there were just two bidders in the fray.

Of the two bidders, Talace quoted Rs 18,000 crore while a consortium led by Ajay Singh (promoter of SpiceJet) quoted Rs 15,100 crore. Talace would now be required to pay Rs 2,700 crore (cash component) while the balance of 85 per cent amounting to Rs 15,300 crore would be debt to be retained by Talace. Rs 46,262 crore will be transferred to Air India Assets Holding Limited (AIAHL). Rajiv Bansal, the Civil Aviation Secretary said that the winning bidder will not retrench any employee for a minimum period of one year. If retrenched after a year, they will have to be offered VRS (voluntary retirement scheme), he said. Gratuity and Provident Fund (PF) benefits will be provided to all employees as well. “As of today, there are 12,085 Air India employees (8,084 permanent, 4,001 are contractual). Air India Express employee strength is 1,434,” he said. Also, the brand Air India, its logo, and creatives cannot be changed for at least 5 years. The name ‘Air India’, can not be transferred to any foreign entity, Bansal added.