Tata Group eyeing up Air India and Indian Airlines stakes

Tata Group is hoping to get a slice of the action in the planned privatization of Air India and Indian Airlines, bringing the two back under the Tata family''s control after a 47-year break.

Tata Group is considering bidding for stakes in Air India and Indian Airlines in the forthcoming privatization of the state-owned airlines. "Personally, I am interested in both the [state-owned] airlines because of my interest in aviation. But eventually, it will have to be a group-level decision after scrutinizing all available information on them," says Ratan Tata, chairman of Tata Group, in a Business Standard report.

The Indian government has said it is prepared to sell up to 60% of Air India, with a maximum 40% earmarked for a strategic partner, subject to a 26% ceiling for foreign buyers, and 51% of Indian Airlines, which is reserved for Indians only. The sales are expected to take place within the next year.

Tata Group hopes to team up with an international airline in bidding for the Air India stake and make a solo offer for the Indian Airlines interest. Tata did not say which foreign airlines it might partner in bidding for the Air India stake, but potential candidates would include Singapore Airlines (SIA); Virgin Atlantic Airways, in which SIA has a 49% stake; and Swissair.

Of these, SIA would seem a likely choice; Tata Group and SIA in 1995 asked the then Indian government for permission to set up a $700 million joint-venture domestic airline. SIA was forced to drop out after the Indian government refused to allow foreign airlines to have stakes in Indian carriers. Tata Group abandoned the plan in 1998 after three years of delays.

For the family-owned Tata Group, Air India and Indian Airlines are no strangers. The family used to own Tata Air Lines, which was renamed Air India in 1946 when it became a public listed company and subsequently split into Air India and Indian Airlines in 1953 when the cash-strapped carrier was nationalized.