Tata Sons Pvt. is set to take over ailing Air India Ltd. again, over half a century after the country’s biggest conglomerate ceded control to the state, ending the government’s hold over an airline.
A panel of ministers accepted a proposal from bureaucrats, who recommended the conglomerate’s bid ahead of an offer from entrepreneur Ajay Singh, according to people with knowledge of the matter, who asked not to be identified as the decision isn’t yet public. An official announcement is expected in coming days, two of the people said.
The proposed handover is a key victory for Prime Minister Narendra Modi, who has embarked on a bold privatisation plan to plug a widening budget deficit. It also puts an end to a decades-long struggle to offload the money-losing flag carrier. Multiple governments have tried to sell the airline — which began life as Tata Airlines in 1932 — but those attempts were either met with political opposition or a lack of interest from potential buyers.
For Tata Sons, the holding company for the salt-to-software empire and owner of British luxury carmaker Jaguar Land Rover, the recommendation means it’s coming back to an asset it started almost 90 years ago.
Established by legendary industrialist and philanthropist J.R.D. Tata, who was India’s first licensed pilot, the airline originally flew mail in the 1930s between Karachi in then-undivided, British-ruled India and Bombay, now known as Mumbai.
With the advent of private carriers in the 1990s, and then a rush of low-cost, no-frills airlines in the mid-2000s, Air India lost its edge in both domestic and international markets. The carrier, known for its Maharaja mascot, suddenly wasn’t the only option for flying overseas and its reputation for impeccable service and hospitality began to ebb.
For Tata Group, Air India adds a third airline brand to its stable, considering the conglomerate already holds a majority interest in AirAsia India and Vistara, a joint venture with Singapore Airlines Ltd. The Economic Times newspaper had previously reported that Tata may emerge as the winning bidder.
