News: Air India officially takes off on its new journey with the Tata Group

Employee Relations

Air India officially takes off on its new journey with the Tata Group

The central government is all set to hand over Air India to the Tata group on January 27th. What does this mean for the airlines’ second innings with the group?
Air India officially takes off on its new journey with the Tata Group

Today marks a key milestone in the history of India’s oldest airliner. After months of a contentious bidding process where the government sought to find potential new buyers of the ageing airline, it was Talace Private Limited, a wholly-owned subsidiary of Tata Sons, that won the bid. The company placed a winning bid of Rs 18,000 crore to acquire the airline. For Air India, it has been a journey of homecoming as the bid by Tata Sons brings the company back into its fold after more than half a century when its control was ceded to the government. 

“Talace Pvt Ltd of Tata Sons is the winning bidder at Rs 18,000 crores. The transaction is expected to close by the end of December 2021,” announced Tuhin Kant Pandey, secretary, Department of Investment and Public Asset Management (DIPAM) back in October of 2021. The government will get Rs 2,700 crore cash from Tatas for the sale of its 100 percent stake.

What marks today as an important date is that today the airliner officially returns to the Tata Group.

Growing employee concerns 

The news of Tata Son’s successful bid was announced back in October of 2021. With any move towards privatization, jobs and employee status become a key concern. Allaying fears, the central government asserted in its announcement that employees’ interest has been protected and ensured in the sale of the airline.  Aviation secretary Rajiv Bansal announced at the time of sale that “the winning bidder will retain all employees, which means they will not retrench anybody for one year.” Those that have to be retrenched or are removed thereafter, will be offered a VRS (voluntary retirement scheme). 

Additionally, the official said that ”the gratuity, pension fund and post-retirement medical benefits of existing and past employees too would be honoured by the new owner.” In a press statement, DIPAM Secretary Tuhin Kant Pandey said last year that the outstanding dues of employees of Rs 1,332 crore as per the report of Justice Dharmadhikari would be paid by the government. 

While we are yet to hear from Tata Sons on the future of their employee policies, they inherit an airline marred with HR disputes and vital concerns put forward by different pilot unions. From the sudden notice given to send Air India staff on leave without pay to pay-cuts imposed during the Covid-19 pandemic that is yet to be lifted, many have their eyes on how Tata Sons intends to work with its employee base to find solutions. 

In a letter jointly sent by the Indian Pilots Guild and the Indian Commercial Pilots Association to Civil Aviation Minister Jyotiraditya Scindia, they said the management had been given “ample time” to redress their grievances, but they have “only weak excuses to offer.”

With the aviation industry returning to its previous state, the union's claim that the other airlines had rolled back the “Covid austerity pay cuts significantly for their pilots.” “In stark contrast,” notes the letter “our management is still content hiding behind the Covid-19 pandemic. The massive pay cut of up to 60% for Air India pilots has dramatically diminished our livelihoods.”  On Monday, the two airline pilot unions warned Air India's CMD Vikram Dev Dutt of legal action as "multiple deductions and recoveries have been projected" on the dues owed to pilots. With the change of hands, unions look forward to how the new owners respond.

Air India today has a total of 12,085 employees comprising 8,084 permanent and 4,001 contractual staff. Its subsidiary Air India Express has 1,434 employees. Nearly 5000 employees will retire from the airline during the next five years. The retired employees will continue to get the medical benefits as per the rules. Nearly 55,000 retired staff are associated with Air India. The challenge in front of the senior leaders at Air India will be to find the right solutions that address these employee concerns.

The case for qualified top leaders

While employee needs remain a critical issue for Tata Sons to solve, many also await to see how the airline performs after changing hands to a private player. Tata as a company is not new to the aviation industry.  Air India will be the third airline brand in the Tatas’ stable as it holds a majority interest in AirAsia India and Vistara, a joint venture with Singapore Airlines Ltd.

Early reports suggested that Tata might look at consolidating its airline business and merging the different airlines. While the move remains in the books,  it will require qualified leaders who understand the industry and its nuances for its profitable execution. Many experts believe that the sale of Air India will pave the way for course correction for the loss-making airline. But to ensure the once top-notch airline in India is restored to its former glory, Tatas will have to look for senior leaders who bring the right skills and expertise to the table. 

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Topics: Employee Relations

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