Air India Deal – History, Alliance and Tata Connection


Air India is the flag carrier airline of India, headquartered at New Delhi. It is owned by Air India Limited of Talace Private Limited, an SPV of Tata Sons, and operates a fleet of Airbus and Boeing aircraft serving 102 domestic and international destinations. The airline has its hub at Indira Gandhi International Airport, New Delhi, alongside several focus cities across India.

The airline was founded by J. R. D. Tata as Tata Airlines in 1932; Tata himself flew its first single-engine de Havilland Puss Moth, carrying air mail from Karachi’s Drigh Road Aerodrome to Bombay’s Juhu aerodrome and later continuing to Madras (currently Chennai). 


Early years (1932–1945)

As Tata Air Services

Air India had its origin as Tata Air Services later renamed to Tata Airlines founded by J.R.D. Tata of Tata Sons, an Indian aviator and business tycoon. In April 1932, Tata won a contract to carry mail for Imperial Airways and the aviation department of Tata Sons was formed with two single-engine de Havilland Puss Moths. On 15 October 1932, Tata flew a Puss Moth carrying air mail from Karachi to Bombay (currently Mumbai) and the aircraft continued to Madras (currently Chennai) piloted by Nevill Vintcent, a former Royal Air Force pilot and friend of Tata. The airline fleet consisted of a Puss Moth aircraft and a de Havilland Leopard Moth. Initial service included weekly airmail service between Karachi and Madras via Ahmedabad and Bombay.  

As Tata Airlines

The airline launched its first domestic flight from Bombay to Trivandrum with a six-seater Miles Merlin. In 1938, it was re-christened as Tata Air Services and later as Tata Airlines. Colombo in Ceylon (now Sri Lanka) and Delhi were added to the destinations in 1938. During the Second World War, the airline helped the Royal Air Force with troop movements, shipping of supplies, rescue of refugees and maintenance of aircraft. 

Post-independence (1947–2000)

As Air India

After World War II, regular commercial service was restored in India and Tata Airlines became a public limited company on 29 July 1946 under the name Air India. After Indian independence in 1947, 49% of the airline was acquired by the Government of India in 1948. On 8 June 1948, a Lockheed Constellation L-749A named Malabar Princess (registered VT-CQP) took off from Bombay bound for London Heathrow marking the airline’s first international flight. 


In 1953, the Government of India passed the Air Corporations Act and purchased a majority stake in the carrier from Tata Sons though its founder J. R. D. Tata would continue as Chairman till 1977. The company was renamed as Air India International Limited and the domestic services were transferred to Indian Airlines as a part of a restructuring. From 1948 to 1950, the airline introduced services to Nairobi in Kenya and to major European destinations Rome, Paris and Düsseldorf. The airline took delivery of its first Lockheed Constellation L-1049 and inaugurated services to Bangkok, Hong Kong, Tokyo and Singapore. 

Codeshare agreements

Air India has codeshare agreements with the following airlines:

  • Air Astana
  • Air Austral
  • Air Canada
  • Air India Express (Subsidiary)
  • Air Seychelles
  • Avianca
  • Croatia Airlines
  • EgyptAir
  • Ethiopian Airlines
  • EVA Air
  • Fiji Airways
  • Hong Kong Airlines
  • LOT Polish Airlines
  • Lufthansa
  • Myanmar Airways International
  • Royal Brunei Airlines
  • Singapore Airlines
  • Sri-Lankan Airlines
  • Swiss International Air Lines
  • TAP Air Portugal
  • Turkish Airlines

Air India’s Homecoming

Tata Sons has won the bid to acquire national carrier Air India on Friday. The salt-to-software conglomerate placed a winning bid of ₹ 18,000 crore re-acquire the airline more than half a century after it ceded control to the government. Apart from 100 per cent stake in Air India and its low-cost arm, Air India Express, the winning bid also includes a 50 per cent stake in ground-handling company Air India SATS Airport Services Private Limited (AISATS).

Tata’s special purpose vehicle (SPV) Talace Pvt Limited emerged as the winning bidder, DIPAM Secretary Tuhin Kanta Pandey said.

Earlier this month both Tata Sons and SpiceJet chairman Ajay Singh (in his private capacity) had placed bids. Reports last month that Tata had won the bid were played down by Union Minister Piyush Goyal, who said then that nothing had been finalised.

Why was Air India sold?

The sale of Air India to a private player has been in the offing for a long time. AI was started by the Tata Group in 1932, but in 1947, as India gained Independence, the government bought 49% stake in AI. In 1953, the government bought the remaining stake, and AI was nationalised.

For the next few decades, the national carrier dominated Indian skies. However, with economic liberalisation and the growing presence of private players, this dominance came under serious threat. Ideologically too, the government running an airline did not quite gel with the mantra of liberalisation.

Why wasn’t it sold earlier?

The first attempt to reduce the government’s stake — disinvestment — was made in 2001 under the then NDA government. But that attempt — to sell 40% stake — failed. As the viability of running AI worsened with every passing year, it was clear to all, including the government, that sooner or later the government would have to privatise the airline.

In 2018, during its first term, the Narendra Modi government made another attempt to sell the government stake — this time, 76%. But it did not elicit even a single response.

The latest attempt was started in January 2020, and even though aviation is one of the worst hit sectors due to the pandemic, the government has been able to finally conclude the sale.

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