Pioneer of India’s Aviation sector –Tatas, is reentering to the country’s aviation sector. The business conglomerate has proposed a joint venture with Singapore airlines to the government.
Tata is entering into the industry at a time when the domestic aviation sector is in turbulence and hence is on restructuring mode. Industry leader Kingfisher is in deep red and is on demise path. Aviation entrepreneurs like Captain GR Gopinath are expelled. Public sector giant Air India is having big losses, which is often covered by sovereign protection.
Existing competitors are tiring because of declining revenues, increasing costs and investment requirements in future.
No entity is sitting pretty in the industry.
This is an opportunity and is the right time for the Tatas to make its reentry and to make a good beginning.
From the part of the government, the new joint venture is not the right choice for ending the problems of the domestic aviation sector. The government has liberalized aviation sector FDI norms to inject funds into the existing troubled entities like Jet and Kingfisher. The Tata-Singapore airlines tie up on the other hand is a fresh entry and is not a solution to the financial problems of the existing firms.