After Air India bid in 2001, Jet is Hindujas' second attempt at airline biz

Had bid for Air India in 2001, but the selloff was aborted due to opposition to its divestment

The National Democratic Alliance government under Atal Bihari Vajpayee in 2001 decided to divest 40 per cent in Air India. Despite making an aborted attempt in 1995 to set up an airline (which faced severe opposition), the Tatas were again in the fray and roped in Singapore Airlines for the bid. But they were not the only ones interested. There was another bidder, the Hindujas, who had been on the edges of the aviation business for a while. And this was their first big step into it.

However, strong opposition to the divestment of Air India in political circles as well as the bureaucracy — this, many say, reflected the growing clout of Jet Airways promoter Naresh Goyal — ensured that the selloff was aborted by the government. Goyal, who ruled the airlines business in India, say analysts, clearly saw the Tatas as big competition. 

Come 2019, the Hindujas are making their second coming.

But this time they are targeting getting Goyal’s Jet Airways back in the skies. And strongman Goyal has been ousted from the airline, which he built from scratch with a large part of his shares pledged to banks.

This week the Hindujas are expected to fly to Abu Dhabi to have talks with Etihad, which has a 24 per cent stake but does not want to be the majority shareholder, on a possible plan of revival. A Hinduja spokesperson confirmed the development: “The Hinduja group is evaluating the Jet Airways opportunity.” 

However, he made it clear that Goyal would have no role to play in the negotiations.

So what made the Hindujas interested in the volatile business of airlines? Opinion is, however, divided on why they wanted to buy Air India in 2001. 
 

Some say Goyal prodded them to make a bid for Air India, so that the Tatas had a serious fight. The Hindujas deny this.  It is no secret, say experts, that Goyal did not want the Tatas to invest in Air India and is believed to have been the key man in lobbying against the divestment. 

Some senior politicians at that time wrote to the prime minister, questioning the logic as to why Jet was not being allowed to bid (the reason was it would lead to a monopoly for Goyal if he got Air India too). And as many as 40 members of Parliament wrote letters against the decision of the government to divest stake in the national carrier. Faced with growing opposition, both the Hindujas as well as the Tatas opted out of the matter.

Others say the Hindujas’ interest in Air India was a natural corollary of their growing interest in getting into the aviation businesses. For instance, the group had a collaboration with Lufthansa from 1997 to run the cargo business by flying cargo planes to the Indian subcontinent from Sharjah, which was its hub. 

The cargo would come to Sharjah from Germany. However, the alliance was terminated because Lufthansa decided to fly cargo directly to India. However, the relationship continued and the Hindujas took the help of Lufthansa to put together their bid for Air India.