The Tata Group has two airlines and two more to choose from—Air India and Jet Airways

• The Tata Group has shown interest in acquiring the assets of the now bankrupt Jet Airways as well as Air India in the past.
  
• State-owned Air India might also be on the block as soon as October this year.
  
• Both airlines have something to offer to Tatas, while posing some serious challenges.
  

It is not every day that an acquirer gets to choose between two country’s largest airline companies to acquire. But the country’s oldest business house, Tata Group is in that lucky position.

Two top airlines are on the block--one of them is the bankrupt Jet Airways and loss-making Air India.

Both of them present a unique opportunity to the Tata Group who already have interests in two airlines. They own domestic carrier Vistara which was launched in 2015, and have controlling stake in AirAsia India.

Not the best

Yet, this is not enough for the group which has flagship companies in every sector like TCS which is IT service leader, Trent which is a top retailer.

In January, the combined number of passengers that they flew over 1.1 million passengers with a combined market share of 8%. However, the leaders are someone else. IndiGo was the undisputed leader in the market with a 40% share, in times when Jet was still flying.

For Tatas to become one of the big players, it needs a push. Much bigger than the funds they are infusing into Vistara, which they own along with Singapore Airlines. This April, it had infused ₹900 crore into the company so that it could buy more aircraft.

Vistara’s chairman Bhaskar Bhat had then also said that it will concentrate on acquiring flying slots and aircraft, as he refused to comment on why they did not put in an expression of interest (EoI) called for Jet Airways lenders.

Yet, the rumours of Tata’s interest in ‘acquiring’ an airline refuse to die down. After Jet went into bankruptcy, reports said that their interest is renewed. And that they’re interested in Jet’s international flying rights and aircraft, as they see no ‘value’ in buying the company right away.

Budget Bonanza

This changed status of Jet also goes with Vistara’s plans to expanding fleet and slots. But the Budget changed the game yet again. The Finance Minister Nirmala Sitharaman said that they will revive divestment of 100% stake in Air India. Later, reports said that this might happen in the next few months, which could be on the back of the fact that the airline is scrambling to pay salaries month after month.

Tatas have a long-standing connection with Air India. For one, the airline was started by its legendary group head J R D Tata. It was nationalised during the Second World War, and taken over by the government in a pre-independence era.

Sentiments aside, gaining control on the top airline which has a market share of 12.8% (which might have increased after Jet was grounded), can propel Tatas close to the second slot, and will be able to compete with IndiGo.

Air India however comes with a massive debt of over ₹29,400 crore, some part of it could pass it on to the buyer. Jet’s debt is much lower at around ₹8,500 crore. But there are benefits that a ‘big player’ can bring.

“In our view, Jet’s cessation of services has left a void in the full-service offering,” said a report by Citi commenting on relaxation of FDI norms in the aviation industry in the Budget. And, a big move might help Tatas soar to new heights in the sector.