Know what the Tata’s plan to make the airline viable after winning the bid now
Ratan Tata’s tweet “Welcome home, Air India,” says it all. Not only did the Tatas rejoice, but so did the country. It was a landmark victory for the salt to automotive conglomerate. If you are like us; then, you had several questions in your mind as soon as you heard the news.
The topmost would be –How will the Tatas revamp Air India? Do they have a plan of action in the works?
Yes, they most certainly do have a plan.
The final chapter in our Maharaja’s Flight Back Home series takes a deep dive into the plans and the changes that may follow to revamp Air India’s fleet, operations, and reputation.
What the Tata’s get from the Government
The Tata’s get access to aviation assets, which take years and tons of money to build. The Group will get 118 from the 141 planes in Air India’s fleet. This lineup will include 58 Airbus A320 family planes, 14 Boeing 777, 22 B787 Dreamliner of AI, and 24 B737 of AI Express in flight-worthy condition. A good mix of narrow and wide-body airplanes and a trained workforce will make the Tata group tough contenders in the aviation space.
According to a Reuters report, the Tatas will now have entrees to slots at hectic foreign airports, profitable destinations such as the Gulf due to bilateral flying rights between foreign nations. The Tatas can now make the most of India’s Star Alliance Global Network membership.
The deal includes 100% of Air India’s money-making low-cost arm Air India Express, 50 percent of AISATS that offers cargo and ground handling services at major Indian airports. Tata Sons will control Air India’s 4,400 domestic, 1,800 international landing and parking slots at domestic airports, and 900 slots at overseas airports.
Adding Air India’s 100% stake to the majority stakes in budget airline Air Asia India and full-service carrier Vistara gives Tata Sons an unmatched advantage.
Now you know what’s in Tata’s basket. Here is a look at the SWOT Analysis for Air India.
Tata’s plan for revival and turnaround.
The turnaround of the loss-making behemoth Air India will not be easy, but the Tatas have a plan. The group intends to make extensive changes at the former national carrier to cut costs and streamline operations ensuring a better position among competitors. Some of the changes planned are:
- Appointing a new Board once the government transfers the carrier to Tata Sons by December 2021.
- The holding company, SPV M/s Talace, and Tata Sons plan to put a new leadership team for the carrier.
- The company plans to tap into TCS and TajSATS capabilities to change Air India’s existing operating model and cost structure. In the words of a Tata group executive, “Did you know TCS runs the IT systems and applications of most national carriers of other countries, except India? Once the deal concludes, TCS will step in to manage A to Z of Air India’s IT and digital operations.”
- Doing so would improve the carrier’s efficiency reducing operational and maintenance costs. TCS manages Vistara’s technology and IT and digital systems for Singapore Airlines, the second-best carrier globally.
- A new CEO will be appointed, while the finance team will work to fix the commercial issues like reducing lease liabilities, renegotiating vendor contracts, and refinancing expensive debt. They will also leverage their relationship with Boeing and Airbus to get better aircraft replacement deals.
These changes are just the beginning. We now have to wait to see how things shape up and if Air India regains its standing and reputation.
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