Global airline CEOs and industry experts have said the Tata group’s takeover of Air India is the best chance the erstwhile govt-run carrier has at revival.
“I think the best thing that could have happened to Air India was for Tatas to take it over,” said Tim Clark, CEO of Emirates.
Clark was speaking to reporters on the sidelines of the annual general meeting of the International Air Transport Association in Doha. He added that he was perhaps the only one in the room that had flown Air India when it was run by the Tatas.
JRD Tata founded Air India in 1932 and ran it until it was nationalized in 1953. He continued to run Air India’s extremely successful and globally renowned international operations under a separate entity until he quit as chairman in 1978.
“If Tatas can’t make it work, nobody over there can make it work,” said Clark.
The Tatas took over Air India in October last year, finding it a pale shadow of its former self, burdened under massive debt and losses. The airline’s accumulated losses at the end of March stood at Rs 83,916 crore. Tata Sons’ and Air India chairman N Chandrasekaran has said the new owners will step on the gas in its initiatives to revive the airline, working on various aspects from better customer service to new planes to higher degrees of digitalisation at the back end.
But the aviation-to-automobile conglomerate has to grapple with a host of challenges including an inflated workforce, a chunk of which will likely be let go after a year; old planes that need refurbishing and old archaic maintenance contracts that need to be restructured. Industry experts recently estimated to ET that the Tatas would need to invest at least $8 billion over the next few years to turn Air India around.
Clark said that for decades, Air India has been a small player in the international sector despite the massive demand for travel in India, fuelled by rising personal incomes, economic growth and a steeply upward mobile middle class.
“You have got a billion population with an NRI diaspora which is so big and growing all the time that for the notion that Air India would not be one of the largest international carriers in the world defies all sense,” he said.
“And yet, for many many many years, decades in fact, it continues to what it has been – a small player on the international scene,”
Speaking separately, Lufthansa CEO Carsten Spohr echoed Clark’s thoughts.
“There is opportunity for Indian carriers to take a larger share of the Indian market than what has happened in the past. Let’s be honest, most of the growth in the market was taken by the Gulf carriers,” he said.
“But actually, wouldn’t they like one of their own to be able to go to places like New York and Vancouver? There has always been reliance on airlines like us (Emirates). Thank you very much. We are very grateful for it. And we keep asking for more. But as I said, get this sorted. And they have a fantastic opportunity. They should take it,” he added.
“If correct strategies are used Air India can become a very powerful player in the Indian market,” said Philip Goh, regional vice president for Asia Pacific at IATA.
“Air India can definitely be strengthened. If there’s one group that can do it, it’s the Tatas,” he added.