Air India Not Business Opportunity, But Responsibility: N Chandrasekaran

Tata Sons Chairman N Chandrasekaran on Saturday said Air India, which is undergoing a transformation, is not just a business opportunity but a "responsibility" for the Tata Group.

The aviation sector faces continuous challenges, he said, adding that global supply chain issues make the availability of parts, infrastructure, and new aircraft pretty unpredictable.

When the Tata Group decided to buy Air India in 2022, people both publicly and privately asked me why. When the Group was doing well, why was it getting into this sector? Chandrasekaran asked in his keynote address at an event here to celebrate the 121st birth anniversary of the Tata Group founder, JRD Tata.

"But I firmly believe that for the Tata Group, Air India is just not a business opportunity. It's a responsibility," he said.

Tatas acquired loss-making Air India along with Air India Express in January 2022, and since then, the group has been working on an ambitious five-year transformation plan.

However, progress has been slower than expected due to various factors, including global supply chain difficulties that have led to aircraft upgradation and delivery delays.

"Every single percentage growth in GDP will give a 2 per cent growth in the domestic aviation sector. (If) India grows 8 per cent, the aviation industry grows 16 per cent. And this game will play out, and will be continuing for a long time, at least the next three decades. So, this is going to be a very exciting phase of economic growth, and for the aviation sector in particular.

"But it's not easy. And it's increasingly difficult, because the aviation sector faces continuous challenges," Chandra said.

He said that the global supply chain makes the availability of parts and infrastructure pretty unpredictable, adding that "every plan that you have is becoming difficult, because of the situations that you face in this area." Chandrasekaran also mentioned that aviation is a very capital-intensive business, and the industry margins are thin.

Noting that India is already the fourth largest economy (and) becoming the third largest economy, he said the 8.2 per cent GDP growth in the July-September quarter is "just fabulous." And India will grow probably at 7 per cent at least, this fiscal year, he added.

According to him, there is increasing consumer confidence and consumption-led growth, and the public infrastructure spending will additionally drive growth.

"So, we will become a USD 5 trillion economy, and we will grow beyond that. And we will do it faster, and the pace at which we will add every additional trillion Dollar will be shorter, and we will create exciting opportunities. But if this has to happen, one of the aspects that needs to work is connectivity," he said.

He said that there are several aspects (of the aviation industry) that one has to manage, while some can be managed because one is capable of managing them, while some are always a surprise.

"Geopolitics is a surprise. Suddenly, your flight routes will change, because you cannot fly over a territory. If you cannot fly over a particular territory, your flights take longer. Your flights take longer, your fuel costs go up ... We have to manage all of this," he said.

The demand for air travel is very high, and the aspirations of Indians are growing as everybody wants to be connected and travel, he said. "So I think our commitment is to build a world-class airline," he said.

He said that the airline should have retrofitted all its domestic fleet by this year-end, and that the wide-body fleet will be retrofitted over the next couple of years.

It should have been done earlier, but supply chains caused delays, he said, adding, "and we will start getting new planes every month over the next three years, we should have almost 95 per cent or 99 per cent of our fleet modern. But we will work on each one of these dimensions. But that's the commitment that we are working towards. (But) It will take time," Chandrasekaran said. 

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