Air India officially handed over to Tata Sons

NEW DELHI: Air India and AI Express are now Tata Group companies. The government on Thursday transferred 100% shares in Air India to Tata’s wholly owned subsidiary Talace Pvt Ltd along with management control.

Tata Sons chairman N Chandrasekaran met Prime Minister Narendra Modi here before taking over the Maharaja that was nationalised exactly 69 years ago.

#FlyAI : Air India Limited, Air India Express & AISATS (AI stake) have become part of the Tata Group today. Senio… https://t.co/BS6EVgLJBu

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“The strategic disinvestment transaction of AI successfully concluded today with transfer of 100% shares of Air India to M/s Talace Pvt Ltd along with management control. A new board, led by the strategic partner, takes charge of Air India,” department of investment and public asset management secretary Tuhin Kant Pandey Tweeted.

“We are very happy to have Air India back in the Tata Group. We look forward to working with everyone in creating a world class airline,” Tata’s Chandrasekaran said at AI Delhi HQ after taking over the airline Thursday in the presence of aviation secretary and former AI CMD Rajiv Bansal — a key architect of this difficult disinvestment, — DIPAM’s Pandey and others.

Union aviation minister J M Scindia tweeted: “Best wishes to the new owners. I am confident that the airline will bloom under their wings, and pave the way for a thriving and robust civil aviation industry in India.”

The Tatas have hit the ground running to restore the Maharaja’s lost sheen.

The focus is on improving on time performance (OTP) — not exactly Maharaja’s strong point — with aircraft door closing 10 minutes before departure time. Inflight announcements will address passengers as guests and there could be a special recorded message from group chairman emeritus Ratan Tata. A “enhanced meal service” will be rolled out on flights in a staggered manner from Thursday.

The changes have started flowing in form of advisories to frontline staff who are interfacing with passengers. As reported by TOI on Tuesday, cabin crew BMI and grooming will be checked when they report for flights. This is being opposed by unions.

“Tonight we will transit from a public sector to a private sector. The next seven days will be very important as we will be changing our image, attitude and perception,” says a mail sent to cabin crew members.

The key points finalised by Sandeep Verma and Megha Singhania of Tatas, who will head inflight service, are that cabin crew are “important brand ambassadors playing critical role in brand/image building.

Passengers will be welcomed, addressed and served as guests. “There will be changes in (inflight) announcements… will be intimated… Special audio address by Shri Ratan Tata,” it says.

“Crew has to be smartly dressed, adhering to regulations. Grooming associates will be observe the crew for the above.” Air India domestic OTP is among the lowest for all big airlines and the founder group realises this needs to change. “On time performance is important. All endeavours to close doors at D (departure time) minus 10 minutes.”

The meal service on board will be enhanced. “The caterers have been briefed. They will gradually provide the meals and equipments for the service.” Delhi-Mumbai and key Gulf routes will be among the first to get this rollout along with flights to the US and UK.

While big ticket changes like fleet and cabin upgrade will take time, two things have been identified for giving a new feel to passengers, nee guests, post the takeover — vastly improved meal service and airline interface with crew and ground staff.

If Tatas are able to transform AI into a profitable airline — something that their recent airline ventures AirAsia India and Vistara have not been since inception in the last 7-8 years — it will be one of the biggest aviation transformations globally.

Challenges — not just financial in terms of massive investment needed for fleet and cabin upgrade — abound for the Tatas. Two pilots unions have warned of legal action over their “multiple (salary) deductions” and have projected recoveries.

“This recovery exercise is entirely illegal, and we demand that this anomaly is rectified and the amount due is repaid with immediate effect,” the letter sent by the two unions said. Cabin crew unions are up in arms against the move to check body mass index (BMI) and overall grooming of staffers when they report for flights.

The Tatas have so far not spoken about their preparations to take over AI and AI Express and also their plans for the airline. That clarity is expected when the handover happens.

It is leant the Tatas have so far not approached the regulator for a licence/s (airline operating permit) for their airline. The Aircraft Act empowers the Directorate General of Civil Aviation (DGCA) to allow the Tatas to operate the airlines in an interim period till they decide what form will their aviation vertical look like — one mega airline or the more likely option of a merged AirAsia India-Air India Express as a big low cost carrier (LCC) and Air India and Vistara continuing as separate full service carriers (FSC).

The four Boeing 747 jumbo jets of AI are also being transferred to the Tatas.

But since they are each over 27-year-old and no longer used for VVIP flights, it remains to be seen if the Tatas use them. The Rs 18,000-crore deal will see Tatas giving up Rs 2,700 crore upfront and taking over Rs 15,300 crore debt. Additionally they will spend several thousand crores on revamping the airline.