New Delhi: Tata Sons’ $2.4 billion purchase of debt-ridden, government-owned Air India will give the conglomerate immediate access to valuable flying rights and landing slots that will help it claw back market share from foreign rivals.
But industry executives warn any success will be a long and complicated process that could cost it more than $1 billion and require fixing myriad problems, including its worn-out fleet, poor service and the lack of a charismatic leader.
Air India, with its maharajah mascot, was once renowned for its lavishly decorated planes and stellar service championed by the airline’s founder, JRD Tata, India’s first commercial pilot.
But since the mid-2000s, its reputation has fallen as financial troubles mounted. It flew widebody planes with business class seats in poor repair and grounded some of its new Boeing Co 787 Dreamliners to use for spare parts. Customers faced many delays and staff and suppliers were not always paid on time, executives said.
“If you don’t have newer airplanes or airplanes that are reliable, no matter what you do, you are going to have a problem,” said a veteran aviation industry executive who was not authorised to speak publicly about the matter.
The ownership transfer from the government to Tata is expected to go through by the end of the year. The company will then have until summer 2022, when a post-COVID demand surge is expected, to fix the issues, the person added, estimating it would cost more than $1 billion to refurbish Air India’s 141 planes and up to $300 million to retrain staff and improve operations and service.
The figures do not include the purchase or lease of new aircraft.
