By Aditya Kumar Gupta
Air India, the largest commercial flyer in one of the fastest growing economies has found itself in the remains of a dump from which there is no escape. The airline has a very strong global brand presence due to its multitude of destinations. All major international hubs have heard of Air India and regard it with respect; along with a high level of international customers. Brand recognition aside, the airlines’ financial performance hasn’t been very appreciable for quite a long period of time.
Air India is up for grabs
Over the last few years, Air India has accumulated a debt of nearly Rs. 52, 000 crores. The government made a statement to the parliamentary panel stating, “Air India’s current business is not sustainable as it is neither generating cash flow nor repaying any debts”. Aviation is not a strategic priority business according to the government and the continued absence of repayment has led the government to begin disinvesting its share in Air India making it available for purchase to the public. The government no longer believes that this is a profitable business and is merely an inefficient use of taxpayer’s money. It is this very action and belief that has led to the announcement that Air India is open to bid from players like TATA and Singapore Airlines.
These two major companies have a visible interest in acquiring a stake in Air India. Leslie Thng, the current CEO of Vistara, has a great respect for the global brand recognition of Air India and sees fit to have a stake in such a large previously government-owned company. CEO of the TATA group, N Chandrasekaran has also stated his interest in the purchase of Air India, although he made no comments of a joint venture with Singapore Airlines, the news of which has been rampant in the aviation sector.
The best bet for Air India
The joint venture in existence between Singapore Airlines and TATA Group could mean big business with an additional investment in a flyer like Air India. As this would further the element of luxury and economy already in existence, and add to it the features of a global commercial flyer with a highly reputed brand image.
If Singapore Airlines does wish to enter the Indian aviation market, its best bet is through a joint venture. Due to its primal luxury nature, it might not prove to be a perfect fit for a market like India’s. On the other hand, Vistara has shown a high degree of customer acceptance and is growing at a very good pace; owned by a group such as TATA it has the required financial support in order for it to flourish further in the market.
Air India has undergone a state of downfall from where there is little to no coming back unless aided with a magnanimous amount of support. The government has put up the ownership of Air India to the public, and Singapore Airlines and TATA Group are open to bids on the business, the best results being possible through a combined investment as previously done with Vistara which has proven to be a success.
Featured Image Source: Pixabay
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