Tata Sons-it takes no rocket science to adjudge it as the most versatile and multifaceted business house of the nation. After all, it is not for nothing that they are christened the salt-to-software conglomerate.
Heres a brief look at how the aviation services arm of the group came into being. Aviator Nevill Vintcent first mooted the idea to ply mail flights between Bombay and Colombo. He found an enthusiast in J. R. D. Tata. After three years of deliberations and negotiations, they won a contract to carry the mail in April 1932. Thus, in July 1932, the aviation department of Tata Sons was formed. It was started with an initial investment of a mere Rs 2 lakhs. Tata Aviation Services, the forerunner to Tata Airlines( later Air India), took off in 1932.
On October 15, 1932, J.R.D. Tata flew a single-engine De Havilland Puss Moth carrying air mail from Karachis Drigh Road aerodrome to Bombays Santacruz airstrip via Ahmedabad. The same year, Tata Airlines launched its longest domestic flight from Bombay to Trivandrum. In 1938, the airline was renamed as Tata Air Services, which later became Tata Airlines. Tata Airlines, a division of Tata Sons, became a joint stock company in 1946. It later got renamed as Air India. In 1948, India had 11 airlines while there was room for a maximum of three.
The Centre thus decided to nationalise all airlines under an umbrella group of Tata. What is making the incumbents jittery, is the arrival of a newer and bigger player, Tata-Singapore Airlines (SIA) in the very competitive Indian aviation sector. It is said to bear negative impacts on Air India and Jet Airways, Indias two full-fledged airlines. Another ruffled feather is that of AirAsia India, Tatas partner in the Indian Joint Venture. The higher management of AirAsia India has even termed the Tata-SIA endeavour as unethical .
Though, the Tatas have refuted the charge of an arcane deal, it is bound to give rise to a bone of contention between the two groups. The story of the sector and Tata as its vital moiety is no less than a theatrical drama filled with intrigue and undulations. The Tata Group is set to hold a 51% stake in the venture. This is the third foreign investment in the Indian airline sector (two involving Tata) this year. The deal was finally successful the third time, after two prior misses.
Going by fundamentals, let us not forget that competition and leading-edge deals are of benefit to the consumers, more so in a developing economy like ours. Several airlines have hit a rough patch of late and this has created problems for the customers. It needs to be seen, how the brains at Tata-SIA decide to dole out services in terms of fares, deals, packages and provisions to the customers who definitely have high hopes. Customer satisfaction in the airline segment improves profitability because it influences the repurchase behaviour of the customers. A bit of introspection tells us that the industry has to pass through expansion, consolidation and concentration in order to provide efficient services. The costs of fuel, labour and maintenance are the challenges that it has to tackle. Unlike the European region which saw a liberalised environment since 1997, the Asia-Pacific region has managed slow liberalization of the sector and has seen a measured growth of alliances.
Recent reports suggest how airlines are shying away from increasing domestic capacities to fill up their flights. The domestic industry traffic has grown by a mere 1%. What will be the bearing of the Tata-SIA deal on the other airlines in terms of capacity addition? Jet airways failed to increase its traffic growth despite the deal with Etihad. The entry of a major counterpart is sure to impact its operations further if Tata goes for capacity additions. This is most likely the case because Singapore is sure to insist for increased bilateral flights thus leading to increased Indian passengers into the operations of SIA. A dynamic and competitive industry like this, and more so a stakeholder in it like Tata, this saga is surely a histrionic one!
By Krutika Kshirisagar
After completing B.Tech from Institute of Chemical Technology (UDCT), Im currently pursuing MBA in Energy and Infrastructure from School of Petroleum Management, PDPU. I have been working as a co-ordinator of CII-Young Indian for the last one year. My strengths are good analytical ability, proficiency in public speaking, good writing, oratory and communication skills, zest and determination to explore new ideas and working in unison with various groups as a group member as well as a leader.