This year’s news of Tata Group’s acquisition of Air India has made headlines. Tata Group returns to the aviation sector after a long hiatus with this acquisition. An Indian conglomerate, Tata Sons Limited is the parent company of the Tata Group. In addition to steel and telecommunications, the company operates in hospitality and automobiles.
As a result of the COVID-19 pandemic, the Indian aviation industry has been heavily impacted. After the pandemic, the Indian aviation industry is expected to recover slowly, and the Tata Group’s entry should boost the industry. With a history of success in various industries, Tata is expected to be successful in aviation. Inbound air travel and business will be boosted by new terminals, flights, and connectivity within India.
The news that Tata’s Air India has ordered 470 aircraft from Airbus and Boeing is also significant. There are likely to be positive effects on the Indian economy from this order. As aviation contributes significantly to greenhouse gas emissions, such an order would also have significant environmental implications. Aviation history considers this procurement the mother of all deals between airlines and manufacturers.
In addition to the growing income levels of the people, increased employment opportunities in urban cities, increased value for time than money in today’s technology-driven world, more affordable airfares because low-cost carriers have entered the market, and improved connectivity through the UDAN scheme. Flights have become a necessity instead of a luxury, as the airlines have increased fleet sizes and improved infrastructure and frequency of flights. As bus and train fares increase along with living standards, choices also change accordingly giving a huge boost to the aviation industry.
The Indian government is using this order as a geopolitical weapon. The Western nations are alleging that India is indirectly funding the Russian invasion of Ukraine by procuring oil and other resources at lower prices from Russia. The Indian government has retaliated by presenting its national interests. US, French, and UK prime ministers changed their stance after India locked such a huge deal. Putting an economic deal in the spotlight has given India an edge in global diplomacy.
Global airlines are exerting strenuous efforts to expand their operations in Indian aviation. Airlines have either started new flights in existing routes or started new routes to and from India. Global players want a bite of India’s booming aviation market. Recently, Akasa Air launched domestic flights in India, while Oman Air announced two upcoming destinations in the Indian cities of Lucknow and Thiruvananthapuram. Turkish Airlines, Emirates and Kuwait Airlines Jazeera Airways all want more flights to and from India. The demand for Indian traffic is also increasing in Vietnam and Indonesia. According to the report, Turkish Airlines CEO Bilal Eksi said, “We’re not getting enough share of the market,” adding that Dubai wants 50,000 additional seats weekly.
Recently, Shri Narendra Modi, our beloved prime minister, highlighted that India will soon become a hub for aviation between the western and eastern hemispheres. Airline transits are already heavy at Delhi Airport, and this may spread to other Indian airports soon. During the CAPA India Aviation Summit in New Delhi, the civil aviation minister said “We need to build the civil aviation infrastructure and capabilities to support a $20 trillion economy by 2047”. This shows the government’s commitment to growing the aviation industry in India and positioning India as a global hub. The number of airports and aircraft fleets in the country is witnessing a paradigm shift, according to Civil Aviation Minister Jyotiraditya Scindia. It now competes closely with Indian Railways in the air conditioning segment of travel, which was over four lahks before COVID.
According to market prospects, aviation will be capturing a significant share of the global market. There is no doubt that the aviation industry will reach its targets soon. In an industry with an expanding consumer base, enterprising service providers, enthusiastic investors and a supportive government environment, millions of dollars would be generated.
GVK, GMR, and our new entrant ADANI are efficiently managing our airports and striving to meet global quality standards. It will drive the industry towards success and yield numerous economic benefits for India. There is a mushrooming future for the Indian aviation industry. All the stakeholders in the aviation industry have worked cooperatively to create an ecosystem that will not dampen the industry’s growth. In the next five years, AAI and other airport developers plan to invest approximately Rs. 98,000 crores in airports. In the next four years, India’s aviation industry is expected to receive Rs. 35,000 crores (US$ 4.99 billion). By 2026, the Indian Government plans to invest US$ 1.83 billion in airport infrastructure and aviation navigation services. By 2025, India aims to have 220 new airports, says Minister of Civil Aviation Jyotiraditya Scindia. A total of 133 new flights will be added in the next five years to handle perishable food items.
The Tata Group’s acquisition of Air India is a significant event for both the Indian aviation industry and the Tata Group. Tata Group’s entry into the aviation sector is expected to boost the industry, and Air India’s acquisition will turn around its fortunes. Take steps to mitigate the impact of aviation on the environment, however, to keep in mind the environmental implications.
KeyWords- Tata Group, Air India, Acquisition, Aviation Sector, COVID-19 Pandemic, Airports, Low-cost carriers, UDAN Scheme, Airlines, Aviation Hub, Civil Aviation Infrastructure,GVK, GMR, ADANI, Airport Infrastructure
