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Tata has all these challenges as soon as he buys Air India, will the ‘Maharaja’ be able to fly his dreams?

Tata has all these challenges as soon as he buys Air India, will the 'Maharaja' be able to fly his dreams?

Air India has returned home after 68 years.

Tata Group has bought Air India for 18 thousand crores. This airline has returned home after 68 years. As soon as Tata becomes the owner of a sinking airline, there are many challenges in front of Tata between saving it and making it capable of flying again. If we look at the history of Tata Group, till now this group has done dozens of acquisitions in the country and the world. She has also saved many sinking companies and in today’s date she is performing well. However, some companies are not able to perform as expected.

The Tata Group is presently present in the aviation sector with the help of AirAsia India and Vistara. However, till now these two companies have not become profit making. Both of these are joint venture companies and their total loss in the financial year 2020-21 was 3200 crores. After the purchase of Air India, the market share of Tata Group Airline (all three companies) in the domestic market will be close to 25 percent. IndiGo is the market leader in this regard and has a market share of 57 per cent. Air India, Vistara and Air Asia India have a total fleet of 227 aircraft. IndiGo alone has a fleet of 257 aircraft. Most of the aircraft near the expansion are narrow body. However, Air India’s fleet consists of wide body aircraft.

Each plane will cost around $2-5 million

According to the Economic Times report, Air India was spending a lot of money as the rental of the plane. Its planes have not been properly maintained for years. In such a situation, many important changes will have to be done including cabin upgradation, engine upgradation. Former Air India director S Venkat had said in the past that if the Tata Group buys Air India, then it will have to spend 2-5 million dollars to upgrade each aircraft.

What happened during Jet Airways

The report also claimed that even when Jet Airways was sinking in FY18, the Tata group was interested in buying it. However, the board of Vistaar had clearly said that buying an old airline is not a profitable deal. He said that if an airline is shutting down, let it shut down, then fill the empty spaces with your new planes.

Aviation sector will be profitable from 2023

Due to Corona, the aviation sector has been badly affected all over the world. According to the report of the International Air Transport Association (IATA), the global aviation sector suffered a loss of $ 138 billion in 2020. It is projected to drop to $52 billion in 2021. In 2022 this will come down to $12 billion. Overall, the aviation sector will suffer a loss of more than $ 200 billion due to this epidemic. There is every possibility of this sector coming in profit from 2023.

Here the group had to bear the loss

If you look at the acquisition history of Tata Group, then this list is quite long. TETLEY was acquired by Tata Consumer in the year 2000. It was the world’s largest beverage company, but could not survive in front of Coca-Cola and PepsiCo. Similarly, Tata Chemicals acquired England’s Brunner Mond Group. In 2007, the Tata Group acquired CORUS. The deal was done for $12 billion. The financial crisis in 2008, the commodity crisis in 2016, caused a lot of losses to the Tata Group. When she wanted to go into a joint venture with Thyssenkrupp, Brexit made matters worse. However, after the recent boom in the commodity market, Tata Group has got some relief.

Here is the successful acquisition

At the same time, in 2001, the Tata Group acquired the public sector company CMC with the help of Tata Consultancy Services. TYCO was acquired by VSNL (currently Tata Communications) in 2004. Today Tata Communications has a market share of 30 per cent in the submarine cable internet market. In 2008, Tata Motors bought JAGUAR LAND ROVER. Currently this company generates the highest revenue for Tata Motors.

Tata quite serious about Super App

The Tata Group is quite serious about the Super App. Due to this, 64 percent stake in BIGBASKET was bought this year. In this, its competition is with Reliance Retail, Amazon and Walmart-owned Flipkart. This year the company has also acquired 1MG. In this segment, it competes with Reliance-owned Netmeds.

Also read, Principal Economic Adviser Sanjeev Sanyal defended privatization, said – Most of the government companies were created by the private sector

Also read, Payment can be done without internet, the government is going to change the rules for instant transactions

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Shehnaz is a Corporate Communications Expert by profession and writer by Passion. She has experience of many years in the same. Her educational background in Mass communication has given her a broad base from which to approach many topics. She enjoys writing about Public relations, Corporate communications, travel, entrepreneurship, insurance, and finance among others.

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Shehnaz Ali
Shehnaz is a Corporate Communications Expert by profession and writer by Passion. She has experience of many years in the same. Her educational background in Mass communication has given her a broad base from which to approach many topics. She enjoys writing about Public relations, Corporate communications, travel, entrepreneurship, insurance, and finance among others.

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