Turbulent Weather Ahead for Tata Group
After acquiring Air India, the challenge before the Tata Group is to turn the bleeding enterprise into a profitable one. Beyond a doubt, the task is not an easy one considering the challenges that the civil aviation industry is facing at present. With the acquisition of Air India, Tata is now the proud owner of three airlines including AirAsia and Vistara. Even then, it will not be a cakewalk for the Tata Group to revive Air India. Rather, the group is bound to face turbulent weather even before takeoff as Air India is plagued with various problems starting from market share to workers’ unrest. These problems cannot be solved overnight. The situation demands mature handling, through professionalism and enough funds to get rid of chronic problems that the airline is suffering from. It may be a homecoming for Air India after 68 years, but the present situation is entirely different than what it was nearly seven decades ago.
The first task of the Tata Group should be to regain market share in the domestic sector. As per statistics, two-thirds of the revenue of Air India comes from the international sector. It is expected that with a considerably big fleet in comparison with some of its competitors, especially the Gulf carriers, which have now become a hit among Indians travelling abroad, Air India will continue to do well in the international sector. The real challenge for the Tata Group lies in making its presence felt in the domestic sector, which is now being dominated by various private airlines. Secondly, the acquisition is taking place at a time when the aviation industry worldwide is facing difficult times as a result of the pandemic. With prolonged lock down and fear of the lethal virus spreading, volume of business in the aviation sector has been severely affected. The situation has further worsened with the imposition of various restrictions on travelling. In such a situation, the aviation industry is not expecting any profits in the near future. While big airlines may survive the hour of crisis, smaller airlines will find it difficult to keep afloat. Considering the situation, it becomes more important for the Tata Group to perform well in the domestic sector, so that it is not badly affected by slumps in international travelling.
A major issue, which is bound to offer sleepless nights to the Tata Group, is managing the huge human resource. The government has committed to pay retirement benefits to nearly 55 thousands employees. On the other hand, the Tata Group has promised to retain the current staff for a year. Thus it is anticipated that the voluntary retirement scheme (VRS) will come into effect from second year onwards. If so, it will create huge resentment amongst staff and workers of the airline and may hinder the progress of the airline. The revival of Air India will depend on how the Tata Group negotiates all these hurdles in the coming days.