Jehangir Ratanji Dadabhoy Tata popularly known as JRD Tata, the father of the Indian aviation industry, industrialist, entrepreneur and chairman of Tata Group, was born to noted businessman Ratan Dadabhoy Tata and Suzanne Briere. Way back in 1929, when the world was still thinking of universal suffrage, JRD’s mother became the first woman in colonised India (still under British Rule) to drive a car.
From a young age JRD was a keen learner and was inspired by his father’s friend Louis Charles Joseph Blériot—a French aviator, inventor and engineer—who developed the first practical headlamp for cars, the first man to fly across the English Channel. Motivated JRD learnt to fly quickly and obtained the first flying license issued in India. He along with his friend started the first commercial Airline in 1932 under the name of Tata Airlines. In 1948, post-Independence, Tata Airlines was renamed Air India and the airline started international operations.
“India will soon become the world’s third-largest market in the aviation sector. As per several estimates, the number of aircraft needed in India in the next 15 years will be more than 2000” — Prime Minister Narendra Modi
The passion, the precision and the detailing of JRD took Air India’s brand to the next level making Air India stand out amongst Western Airlines. Once JRD told his staff, “I want that the passengers who travel with us do not have occasion to complain. I want to establish that there is no airline which is better liked by passengers, that is safer and more punctual, where the food and service is better, and which sets a better image than Air India”.
Nationalisation, descent & liability
In 1952, as the time was arriving for Air India to lead the aviation industry globally with its service quality and precision punctuality (It was said that people, used to match their watch with the landing & take-off of Air India flights), Prime Minister Nehru decided to nationalise all airlines in India including Air India International. The rationale was that all modes of transportation should be government owned so that fares could be kept low. The intent was good, however, the action of the then government led to a Cobra Effect, the Price of which Air India will pay in the next 70 years.
Post-Independence, due to years of loot and plunder by British, there was a time in the 50s when an average Indian didn’t have enough money to travel by road or rail. Thinking and nationalising aviation through Government control was surely not wise. JRD protested, demurred, however, the pleas fell on deaf ears. JRD continued as the Chairman (pro-bono) and later as a Director (without any remuneration) for the next two decades on the board of Air India but his recommendations and suggestions were never attended to.
“This achievement shows that Airbus and all its French partners are fully dedicated to develop new areas of dedication with India” — French President Emmanuel Macron
In the book, The Descent of Air India, Jitendra Bhargava, a former executive director of Air India has detailed how Air India once a rising star was brought down due to Government interference, a series of bad decisions, and a deteriorating culture under the new owner, all of which expedited the descent of the Air India. From being a jewel, Air India became a liability for the government—a bone in the throat that it could neither swallow, cough out. In the last couple of years, the government was spending approx. Rs 20 crores per day to just keep the Airlines afloat.
Finally, in 2022 Jan, the Maharaja came back under the wings of Tata Group with Tatas paying the Government Rs 18000 crores to buy the Airlines. JRD was given Rs 2.80 crores in 1953 to nationalise Air India and Tata Group paid Rs 18000 crores. Thus the Government of India earned an IRR or CAGR (compounded returns) of 13.5 per cent to investment of Rs 2.8 crores for 69 years. But past irregularities of Air India (under previous government regimes, more prominent from the 1980s onwards) cost dearly to the Central Government, leaving a hole in government pocket with an outstanding liability in its book of Rs 46,262 crores.
After the acquisition
One year has been completed since the acquisition by the Tata Group. A couple of weeks ago, The Tata Group announced that it has placed an order that is the largest in the history of Aviation worth—80 billion USD. Just to bring in the perspective of the size, the entire Belarus economy, the ally of Russia in the Russian Ukrainian War, is sized at 79.5 billion USD. In 2011, one of the largest transactions in Aviation history was recorded. American Airlines then placed a record order for 460 single-aisle planes from Airbus and Boeing in a deal worth more than USD 38 billion. In 2014, China Aviation Supplies Holding Company or CAS ordered 70 Airbus A 320s worth USD 10 billion and 130 Boeing 737s worth 38 billion USD on behalf of various Chinese Airlines. The composite transaction value was USD 38 billion with 200 Aircraft. In 2017, Chinese Southern Airlines placed an order for 20 Airbus A 350 worth USD 6 billion. The Air India deal with 470 Aircraft is the largest in aviation history both in terms of value and number of aircraft and is divided between Airbus of France and Boeing of the United States almost equally.
The order comprises
1. 40 Airbus A350s, 210 Airbus A320/321 Neos and
2. 20 Boeing 787s, 10 Boeing 777-9s wide-body aircraft, and 190 Boeing 737 MAX single-aisle aircraft.
The A350 aircraft will be powered by Rolls-Royce engines, whilst the B777/787s by GE Aerospace engines. All single-aisle aircraft will be powered by engines from CFM International (a 50/50 Franco-American joint venture between GE Aviation and Safran Aircraft Engines).
Influence on the West
With the world under the grip of high inflation, rising interest rates, recessionary pressures, challenges in the supply chain and food shortage emerging from the Russian Ukrainian War, and slow recovery from the Pandemic, the Indian Tata group has stepped up to lead the World.
“I am proud to announce today the purchase of over 200 American-made aircraft through a historic agreement between Air India and Boeing. This announcement also reflects the strength of the US-India economic partnership” — US President Joe Biden
There was a time in the 1960s when India was seen as a country with a begging bowl. Today the same country, Bharat is providing Jobs to Western Countries, including the United States, where 220 Boeing Aircraft Purchases by Air India will provide jobs to over One Million Americans across 44 states of the United States. This deal has deepened the relationship with both sides of the Pacific, Europe and the US. Once the subjugator of India, the UK also stands to gain immensely from the Boeing Airbus Deal as the engines used in Airbus are manufactured by British company Rolls Royce in the UK. Airbus’s significant portion of the manufacturing will take place in the UK. The Air India deal will bring over 100 million GBP in Whales and more manufacturing jobs in the villages, and towns of Broughton, Filton and Derby, located in the UK.
Why? The Rationale
The Opportunity that now presents in front of Tatas is to have a global foothold in the leisure and Business Air traveller segment. A Global perspective with Indian Values and an Indian hospitable heart. The Aviation Industry which was struggling even before the Pandemic is recuperating back with a vengeance.
“This landmark deal between Air India, Airbus and Rolls-Royce demonstrates that the sky’s the limit for the UK’s thriving aerospace sector. The UK is already a top investment destination, and by building trade ties with growing economic powers like India, we will ensure UK businesses remain at the forefront of global growth and innovation”
— UK Prime Minister Rishi Sunak
Revenge Travel (fulfilling un-satiated travel aspirations for 3 years), need for instant gratification on account of uncertainty of the future (belief Pandemic has brought) and meeting with relatives, clients, partners and vendors who have not been met in the last 3 years physically has led to a surge in aviation industry’s revenues. Furthermore, the eagerness to travel to holy and spiritual sites has led airline tickets to outpace Inflation by—15 -20 per cent globally.
India Outpacing China
Till very recently, China was leading the way in the aviation industry. Before the pandemic China was perceived as the ‘Factory of the World’ and the leader in the Air Travel Business. However, post pandemic and the Indian Government policies have changed the way world looks at India, Indian Aviation Market and Indian manufacturing.
Some key developments reflecting
Bharat’s Progress
(i) China has over 200 airports whilst India currently has 150 airports. However, the Govt of India (GOI) is working on 80 new airports that will be operational in the next four-five years’ time frame taking the tally of Indian Airports to 220, superseding China.
(ii) Before the Pandemic China had 600 million
domestic Passengers and 150 million International
Passengers while India had 150 million domestic and 70 million International passengers.
India opened faster post-pandemic, vaccinated more and ensured the health of its citizens remained in good shape, thus India’s air travel has reached 80 per cent of the pre-pandemic Level of Dec 2019 whilst China is still 20-30 per cent of the pre-pandemic Level travel.
“Air India is not just another project. It is a national project. There are huge expectations. We are going through a major transformation because we are committed to building a world-class airline known for safety, on-time performance, the best of Indian hospitality and modern fleet and a wholesome experience for every passenger, whether they are in the first row or the last row” — Natarajan Chandrasekaran,
Chairperson of the Tata Group
With the US-China tensions on the rise, the West wishes to engage constructively with India to ensure they have a dependable strong ally in Asia, both militarily as well as commercially. This large deal cements the relationship and dependence of the West on India not only in terms of geopolitical but gives a boost to the economic ties as well. This is also good diplomacy from India, especially when India abstained from voting against Russia in the UN Security Council which irked a lot of Western Nations. Now the elephant is on the move and it’s too big to ignore. William Shakespeare once said, “Life is a full circle, widening until it joins the circle motions of the infinite.”Maharaja has come full circle to its progenitor, in the same way, Bharat is emerging as the Vishwa Guru. The ‘golden sparrow’ will show the path to the world as it used to till a millennium back.
(The writer’s views are personal)
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