History of AIR INDIA: From JRD Tata to Ratan Tata

History of AIR INDIA: From JRD Tata to Ratan Tata

KAKALI DAS

Sky was the limit for Air India under JRD Tata, and once again it’s back under Tata leadership.

The company was once on the verge of shutdown. But, how did a world class airline that was called a palace in the sky become a liability?

In fact, a liability of 1 lakh 57 thousand crores in a span of nearly 10 years. The long story of Air India also tells the story of Govt. control.

JRD Tata – The father of Indian aviation

JRD Tata was in love with aviation since childhood. He used to observe and learn from flying heroes Louis Bleriot and Adolph Pegoud in France. In 1909, Bleriot was the first to cross English Channel by air. His passion for flying strengthened during teenage years and Tata decided to become a pilot. Little did he know that his move would also decide the trajectory of the nation. Tata trained at the Bombay flying club at the age of 24.

In 1929, JRD Tata passed the flying test with flying colours and received country’s first commercial aviation certificate with the tag number 1. However, Tata had planned ahead – to make India #1 in aviation as well. In 1932, he piloted the first flight from Karachi to Mumbai in a Puss Moth plane. No one knew this flight would in turn birth one of the best airlines in the world – famous for its hospitability and grandness.

Not only that, Air India would go on to inspire such international airlines as Singapore Airlines and Cathay Pacific.

Air India is born

Tata Air Services was born in 1932. In initial years, Tata air service delivered mail. The company kept adding new destinations in its route and gradually ventured into passenger flights. Tata Air Services was winning plaudits for its efficiency and on-time performance as soon as it launched. Imperial airways – the British carrier – sent a team in 1933 to learn tricks of the trade from Tata air service. 

Tata air service reached new heights for a decade and the next big change happened in 1938 when its name changed to Tata airlines. This was not a marketing scheme or for show – but because the company had begun international operations by that time.

Starting with Colombo, Burma, and many more destinations – the company was hugely profitable. However, the second world war stalled airline’s growth for a while as commercial flights were stopped. But, in 1946, Tata airlines became a public listed company.

Nationalism of Air India

The biggest setback to Tata was when in 1953 all airlines were nationalized by the Govt. Two corporations, domestic and international, were established, with the names Indian Airlines Corporation and Air-India International respectively.

JRD Tata was against nationalisation, as he believed Govt. shouldn’t interfere in matters of little knowledge. He feared increased lethargy and low staff morale. 70 years later, the fear of JRD Tata stands true as Air India was privatized again.

JRD Tata protested and even requested Nehru against the takeover, but Nehru would ignore Tata on the subject. JRD Tata himself recalled it in an interview. Govt. and Nehru knew JRD Tata had to be involved in the new venture – he was offered the role of chairmanship.

His recollection in the autobiography shows how big a patriot JRD Tata was and how important Tata legacy is for our country.

JRD Tata in his biography wrote, “I came to the conclusion that I should not shirk the opportunity of discharging a duty to the country and to Indian aviation. I am particularly anxious that the present high standards of Air India International should not be adversely affected by nationalisation.” So, to ensure high standards are not affected, Tata accepted the opportunity.

Even after nationalisation, until there was JRD Tata, Air India climbed new heights and new destinations including Paris, Rome, Tokyo, etc. were added. In 1962, Air India became the first carrier with jet engine powered planes – they owned the latest technology.

Air India was known for their world class menu which was prepared by Taj hotels, once upon a time. Heart-warming hospitability, stunning air hostesses, famous paintings depicting our culture – Air India became a household name, in other words, a soft power of India. Soon it earned the mascot of the Maharaja.

JRD Tata played an integral role in the growth of Air India. He travelled sometimes as a pilot or a passenger many a times to examine high standards. There were even instances that on seeing the aircraft toilet dirty, he took it upon himself to clean it.

Then in 1979, a tragic accident left 213 passengers of Air-India Boeing dead – the biggest air disaster of the time. Although, investigation revealed that the pilot was at fault due to a technical glitch – this was a time when top leadership was held directly responsible. Then, then Prime Minister Morarji Desai ousted JRD Tata as chairman of Air India.

You can see how JRD Tata and Indian politics shared a relationship – there was a misunderstanding, but the airline could not have functioned without his guidance.

Then started an important phase – JRD Tata who hadn’t taken a salary was ousted in a manner that lowered employee morale. The MD resigned, and the cabin crew and officers’ association protested. Even foreign media wrote about it. London’s Daily Telegraph dated February 27, 1978 carried the headline “Unpaid Air India Chief is sacked by Morarji Desai.”

Someone at a dinner party asked Tata how it felt to be ousted from Air India, he replied, “I feel as you would feel if your favourite child was taken away.”

Also, it should be mentioned that Indira Gandhi and JRD Tata had a mutual respect for each other – she wrote a letter to Tata praising his contributions and accomplishments at Air India. Hence, when Indira Gandhi became the Prime Minister, JRD Tata was elected on the board of Air India in 1980, a position he held till 1986. Later on, PM Rajiv Gandhi elected Ratan Tata as chairman of Air India. Unfortunately, Ratan Tata resigned after 3 years.

Air India Stumbles

What happened to Air India after that? The carrier was accumulating losses – that climbed to 77,953 crores by 2021. In life, we usually notice that a good team makes a good company, whereas a wrong team would do the opposite.

For example – A successful Reliance was divided between two brothers Anil and Mukesh Ambani (it is said Anil Ambani got the better half). Eventually, one half grows, while the other goes bankrupt – which proves importance of leadership, vision and management. Same happened with Air India that time.

But, Air India makes one last leap in 1991 after liberalization. Y.C. Deveshwar joined Air India as Chairman in 1991. Under him, profits doubled to 333 crores in 1992-93, and this made Air India 6^th most successful carrier in the world that year.

Deveshwar’s management style and consumer understanding were phenomenal – Air India was making profit of 1 crore every day. It happened while tourist football fell by 10% after Babri Masjid demolition and 2-month strike by Air India pilots. After Y.C Deveshwar, Air India’s profits fell sharply again.

Reasons for AI’s Downfall

1. Greed and Mismanagement – Hunger for money never ends – from 1994 to 1999 – the top leadership sought their own benefit, and airline reserved declined. The management’s goal was ensuring allowances, generous incentives and deals with sales agents. Later, pilots and aircraft maintenance engineers demanded US equivalent salaries, which when accepted, led to losses.
2. Faulty Aircraft Configuration – Boeing 777 and Boeing 747 of Air India fleet had a rarely used vanity first class, which led to increasing operating costs. This is not all – another masterstroke policy by Air India did the rest – using fuel inefficient Boeing 747 domestically, and it obviously led to huge losses.
3. No Direct Flights Connecting Major Cities – There were no direct flights connecting major cities but management took no heed. Air India, for example, simply forced passengers going from Kerala to the Middle East or from Bengaluru to the US to travel via Mumbai/Delhi, adding 8-16 hours of total travel time.
4. Ordering new fleet of 111 Boeing Aircrafts – Doing something to make headline can prove costly for any big company. In 2005, when the airlines’ conditions weren’t good, Air India’s board of directors made an offer to Airbus for 10 planes – but then it was secured by Boeing for not 10, but 111 planes. America was mighty pleased with the order but what about the money? Air India used equity for the purchase – but there was no strategy how to use the new fleet – headline was made.
5. Failure of Merger Between Air India and Indian Airlines – The two big airlines were merged. But a toxic relationship does no good to partners involved. Merger happened in 2007 but they had separated kitchens even after their marriage. What’s more – clashes and losses increased. A CAG report shows that company had 11,433 employees against requirement of 7,245. So, overemployment was also a reason behind losses.

There are other reasons for failure, but overall, it shows that Govt. could not manage the airline after Tatas.

Air India comes back to Tata’s

Political establishment realised they should have never taken over Air India – the 30 year could have been invested into the research of fighter craft. It was too late for privatisation – first attempt was made under PM Atal Bihari Vajpayee in 2001. Ratan Tata was interested in acquiring 40% ownership – the plan however flopped. Second attempt – Modi govt. part – 1 tried to sell 76% ownership (again plan did not materialize).

But, as is said, third time is the charm, finally in 2020, Modi Govt. agreed to sell 100%. Then, Ratan Tata bought Air India for 18,000 crores, bearing all losses.

After 70 years, Air India completed a full circle and returned to its parent company, as it was formally handed over to Tata in Jan, 2022. Air India is making international history within a year of its hand over. Signing of the mother of all deals – 470 confirmed orders and 370 options to purchase in the coming decade – biggest commercial plane order in the world.

It’s so big an order that French and US presidents are writing think you notes to India. It again shows that our nation can challenge anyone in business – if business people are allowed to do the work without fear of tax terror.

Tata has started to recognize Air India’s fault lines – the reasons that led to its downfall. With new technology Air India will reduce expenses and increase consumer experience. Narrow body aircrafts will be used for short haul flights, and the wide body aircrafts for long haul flights. Merger of Vistara with Air India is aimed by 2024, so that their combined market share becomes 20%.

The 5-year plan of CEO Campbell Wilson is also ready – first 6 months for grievance redressal, next 18 months for capacity building, then climb phase to reach a world class level or surpass it – to reclaim the Maharaja tag and honour JRD Tata. It seems that ache din (good days) of Air India are here to come.

Moral of the story – Govt. must run country not an airline, business people can do that efficiently. Govt. has to focus on education, law and order, free press, women safety, unemployment, open economy, etc.

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