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Air India sold to Tatas for ₹ 18,000 cr, public fears tax payer’s burden

Air India is sold to Tatas for ₹ 18,000 cr, selected as the winning bidder for India’s flag carrier, a high-profile sale boost for PM Modi.

The Tata group had put in a bid of Rs 18000 crore for the auction of Air India and SpiceJet made a bid of 15,000 crores. The biggest bidder Tatas consecutively bought Air India. The government had fixed a minimum reserve price of 12906 crores for Air India, but the net worth of Air India, which was continuously making losses, had come down to -32 thousand crores.

Interestingly, after 68 years, Air India has once again returned to the hands of the Tata Group. After four consecutive attempts, the process of the sale of Air India was finally completed and once again it has returned to Tata. Air India has been bought by the Tata Group in the biggest bid consecutively.

Welcome back, Air India,” Ratan Tata, JRD Tata’s successor and chairman emeritus of Tata Sons, said in a tweet. “While admittedly it will take considerable effort to rebuild Air India, it will hopefully provide a very strong market opportunity to the Tata Group’s presence in the aviation industry.”

“I congratulate the Tata Group on winning the bid for Air India and wish them all the success,” runner-up Singh said in an emailed statement. “It’s time for the Maharaja to reclaim its position as a leading airline of the world.”

What is In The Deal: Tata Sons, Air India adds a third airline brand to its stable and gives it access to more than a hundred planes, thousands of trained pilots and crew, and lucrative landing and parking slots all around the world.

It is assumed that this sale will end decades of attempts to privatize a money-losing and debt-laden airline, and potentially ending years of “taxpayer bailouts that have kept the company alive.”

Drawbacks:  This purchase will be a test of the group’s aviation vision because Tata Group has faced criticism for not administering its existing aviation businesses efficiently, even though they represent a tiny portion of overall revenue.

After the sale of Air India, what would happen to the employees?  The government has said that the interests of Air India employees will be fully taken care of. They will be kept completely safe. The government has clarified that no employee of Air India will lose his job. The government has said that no employee of Air India will be fired for the next one year.  Air India has 12485 employees, out of which 8085 are permanent employees, while 1485 employees are from Air India Express.  However, there are fears still lurking in people’s minds with recent turbulent changes with already so many government employees having lost jobs in different sectors.

Financially, Air India is heavily burdened.  Out of the auction amount, Rs 15,300 crore will be spent by the Tata group to repay the debt of Air India, while the remaining Rs 2,700 crore will be given to the government. DIPAM Secretary Tuhin Kant Pandey himself disclosed this information and said that where Air India’s debt was Rs 46262 crore as of March 2021, by August 2021, this debt increased to 61562 crores.

In this 18000 crore deal, the government will get only 2700 crore and this will put a heavy burden on the public because Air India has a total debt of Rs. 61,000 crore and while Tatas will take over Rs. 15,000 crores, the remaining debt of Rs. 46,000 crores will continue to roll in tax books putting a heavy load on taxpayers to pay that interest.

As we already know, India is heavily burdened with increased taxes with raised prices of commodities from each product due to hiked rates, highest taxes in the world from fuel, and along with that, the new 46,000 crores from Air India will be placed on the public.

While a lot of common citizens are cheering on the Air India sale considering it is for the welfare of India, it is, in reality, a big fisherman’s hook where the big fish will get great cuts and benefits out of the sale, while the common citizen has to keep paying out of pocket laboriously in the midst of joblessness and financial drains and tax pains.

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