In December 2012, about three weeks before he would retire as the head of Tata Group, Ratan Tata made a startling admission — he said the salt-to-software conglomerate was unlikely to ever enter the airline business. The reason that drove Tata to his decision was “destructive competition”. “Overseas, people go bankrupt or companies go bankrupt. Here they never do, they continue to be sick and still operate. Then they are operating to kill you,” he told PTI.
Compelling reasons as these were, the declaration was still unexpected on two counts. One, the Tatas have long held an unequivocal longing for the airline business — there is no better word to describe the group’s trysts with the industry owing to a history of interruptions and obstacles — and it seemed it was going to remain that way. Two, the group was turning its back on the sector at a most inopportune time, at least from a regulatory standpoint.
The government had about two months earlier permitted foreign carriers for the first time to invest (up to 49%) in airlines in India, paving the way for businesses like Tata Group to launch a carrier with a partner in tow. Tata hadn’t slammed the door shut in the face of aviation though. A few days later, in an interview to an inhouse magazine, he talked about an unfinished agenda in his career.
But he kept it under wraps, saying “it would not be fair to my successor…”
Today, ten months after those interviews, Tata Group is pressing ahead with not one, but two airline companies. The first, AirAsia India, a low-cost airline in partnership with Malaysia’s AirAsia Bhd and Delhi-based Telestra Tradeplace that was announced in February, has collected all the government approvals and now requires only an operating permit from the aviation regulator for a launch sometime early next year. The second, Tata-SIA Airlines, is a full-service carrier for which the Tatas teamed up with Singapore Airlines in September.
Dream Come True
At long last, 13 years after his last shot at airlines was aborted, Ratan Tata is not just living a long-cherished dream — he is living it up. Tata had retired by the time AirAsia India was unveiled and he had apparently eased into a new role out of Bombay House, the Tata group headquarters, when Tata-SIA was created. But that would be to sell short the starring role he played in the creation of both the ventures, according to multiple sources with direct knowledge of the matter.
The two foreign partners, which first approached Tata with proposals to launch airlines in India in mid-2012 when the government was toying with relaxing FDI rules, came to him again in early 2013, said a person who was involved in the talks. “He recommended the proposals to Cyrus [Mistry, Tata"s successor] and the Tata Sons [the holding company] board,” he said, asking not to be named.
Deals with Singapore Airlines & AirAsia: Ratan Tata"s aviation dreams finally ...
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