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AirAsia and Tatas to fly together

 | February 22, 2013

What would be the business share of the Tatas and Telestra Tradeplace? This is not yet clear, but Tata executives have said that their role will be purely financial.

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One of India’s earliest business tycoons, J.R.D Tata, founded the country’s first commercial airline in 1932. His Tata Airlines became Air India in 1946, now the nation’s national carrier.

In the years that followed, Tata and his company lost stake they had in Air India, and their subsequent efforts to get back into the business of flying ran into one air pocket after another.

But now, the Tatas seem to flying in clear weather.

A three-way agreement with Malaysia’s low-cost airline, AirAsia, Arun Bhatia of Telstra Tradeplace and Tata and Sons to jointly float an airways has been reached.

The Tatas’ initial love for the skies turned into aversion when their attempts were hijacked reportedly by jealous competitors and a corrupt administration. And this happened not once but twice.

In the early 1990s, the Tata group of companies tried entering the aviation sector by opening an airways in partnership with the Singapore International Airlines (SIA). But the plan came to nought.

Sometime later, the Tatas wanted to be part of Air India’s disinvestment plan again through collaboration with the SIA. Here again, the Tatas were hijacked.

On both occasions, unscrupulous competition and unethical practices stopped the Tatas as they were all set to take off.

However, the skies seem to have cleared of storm clouds, and according to the new plan, AirAsia will hold a 49-per cent stake in the new flying firm.

What would be the business share of the Tatas and Telestra Tradeplace? This is not yet clear, but Tata executives have said that their role will be purely financial. They will not be part of the operations, which will be handled by AirAsia.

The issue now uppermost in aviation circles is the Tatas’ foray into flying after all these years — and two aborted take-offs. It is probable that the Tatas are merely setting right what they thought had been grossly wrong.

In the 1990s, the Tatas were weeks behind launching an airline, but Naresh Goyal’s Jet Airways allegedly impressed upon the government to reverse a policy allowing foreign carriers to invest in Indian airlines.

Jet was a fledgling business then, and Goyal obviously did not want a rival as formidable as the SIA and a business house as renowned as the Tatas to ruin his chances to grow.

These charges against Goyal were never proved, but in his book, “An Outsider Everywhere – Revelations by an Insider”, M.K. Kaw, the then Civil Aviation Secretary, wrote: “The history of civil aviation in this country would have taken a different trajectory if the Tata-Singapore Airlines had been allowed to float an airline.”

Kaw also reportedly wrote that the then Civil Aviation Minister, C.M. Ibrahim, refused to clear the Tata-SIA proposal despite papers being put up before him.

During the second instance, the SIA, which was trying to partner with the Tatas in Air India’s disinvestment, backed out at the eleventh hour when it found the Indian government wavering. Ultimately, the disinvestment itself did not happen.

Hopefully, players like AirAsia and the Tatas will do a world of good to Indian aviation. Admittedly, AirAsia is not Singapore International Airlines. But with a new government policy in place in India, the doors could open even wider for healthier skies.

Jet Airways has been in talks with Abu Dhabi’s Etihad Airways for a possible collaboration. More deals can take, but one hopes that the Tatas will be lucky the third time round.

Gautaman Bhaskaran is India Editor of FMT, and Chennai-based author, columnist and movie critic. He may be emailed at[email protected]


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