Ratan bids to wrest back JRD’s dream

New Delhi, Oct 5: Though the group's plans still remain a bit in the air, Tata Group chairperson Ratan Tata today announced that the group...

New Delhi, Oct 5: Though the group’s plans still remain a bit in the air, Tata Group chairperson Ratan Tata today announced that the group plans to fulfil JRD Tata’s dream, as it were, and bid for Air India. JRD started Tata Aviation which later became Air India in 1948 and the group had a 25 per cent stake till it was nationalised in 1953. “I wish he was with us,” a visibly moved Tata said.

The Tatas propose to lead a consortium which will bid for Air India, and said that they will hold the majority stake in this consortium — while a foreign airline will be a partner, it will hold a minority stake. Who this will be is still not clear, though, the Tatas are having discussions with Singapore Airlines and a couple of other airlines. Was Virgin a possible partner? “No one which causes a concern over the geo-political situation in India!” was Tata’s tongue-in-cheek reply which essentially rules out any US firms.

Tata said while the foreign partner would be given control over operations in the venture, the Tata Group would be the dominant partner.

Story continues below this ad

Tata said he didn’t see an airline joint venture having the same kind of problems that several Indian firms including his have had in the past. IBM, for instance, wanted full control of the joint venture with the Tatas, as did Mercedes. “In these kind of ventures,” Tata argued, “the technology came embedded with the product.” That, however, does not apply to an airline.

Funds, Tata agreed, could be a problem area — in the past, several joint ventures have collapsed since the Indian partner didn’t have enough funds to put in when the organisation grew. “I think funds are an issue — and Indian financial institutions will have to be alive to the needs of Indian companies.”

Tata refused to give details of which Tata group firm will be formally bidding for Air India, nor did detail how the group planned to finance the purchase if they won the bid

He said the group found the Air India opportunity very exciting since there was a huge gap in the demand for seats and those available. While the total demand is for around 12 million seats per annum, all global airlines who flew to India met just around half of this.

Story continues below this ad

Thanks to the way Air India has been run down over the years, Tata does fly Air India sometimes even now, though not by choice — when he doesn’t get another connection!