Air India, India’s national carrier, has been officially handed over to the Tata Group, which purchased the debt-ridden airline in October of last year.
The Tatas paid nearly $2.4 billion (£1.7 billion) after the government relaxed the terms of the debt for the buyer.
The airline was founded in 1932 by the salt-to-steel conglomerate before being taken over by the government in 1953.
The handover concludes a years-long attempt to sell Air India, which has incurred $9.5 billion in losses.
Before the handover, Tata Group Chairman Natarajan Chandrasekaran met with Prime Minister Narendra Modi on Thursday.
The airline’s current board of directors has resigned, making way for a new board appointed by the Tata Group.
When Air India will begin flying under the Tata banner is unknown.
The airline described the agreement as a “wholly new chapter” in its history. “Two iconic names join forces to embark on a voyage of excellence,” the company wrote on Twitter.
Air India has a plethora of assets, including prized Heathrow airport slots, a fleet of more than 130 planes, and thousands of trained pilots and crew.
Tata Sons already operates two airlines in India: Vistara, a full-service carrier in collaboration with Singapore Airlines, and AirAsia India, a low-cost carrier in collaboration with Malaysia AirAsia Bhd.
Since 2007, when it merged with the state-owned domestic carrier Indian Airlines, Air India has been losing money. It remained open as a result of taxpayer-funded bailouts.
The government claimed that running the airline cost nearly $2.6 million per day.
The airline’s management blamed its poor financial performance on rising aviation fuel prices and airport usage fees, as well as competition from low-cost carriers, a weakening rupee, and the interest burden.
According to Jitender Bhargava, a former executive director of Air India, the airline “suffered for its inconsistent service standards, low aircraft utilisation, dismal on-time performance, antiquated productivity norms, lack of revenue generation skills, and unsatisfactory public perception.”
Nonetheless, the airline has attracted buyers because it owns a number of valuable assets, including prime real estate worth millions of dollars.
Aside from the airline’s fleet of over 130 aircraft, the new buyer will now control 4,400 domestic and 1,800 international landing and parking slots at domestic airports, as well as 900 slots at international airports. International operations generate more than two-thirds of its revenue.
According to the aviation ministry, its fixed assets – land, buildings, and planes – were worth more than 450 billion rupees ($6 billion) in March of last year.
Air India also has over 40,000 pieces of art and collectibles, including an ashtray designed and given to the airline in the 1960s by Spanish surrealist artist Salvador Dali. In exchange, the airline provided Dali with a baby elephant, which was flown to Spain.
With passenger growth in India of around 20% per year and analysts claiming that the Indian market is vastly underserved, experts say Air India is a good prospect for Tata Group.
Prasanta Patnaik