Air India (AI) was created by industrialist JRD Tata and it undertook its first international flight in 1948. At the time many people thought that it was a crazy idea for AI to start operations on the India-UK sector as it was dominated by airlines like KLM, Air France and Imperial Airways, which were all established players on the route.
In 1948, a brand new Lockheed Constellation L-749 made its first Mumbai-Geneva-London flight, flying in Air India International’s colours.
In 1953, the Air Corporation Act came into being and created two airlines—Air India International and Indian Airlines Corporation (IAC), the forerunner of Indian Airlines. The idea was that Air India would fly on international routes while IAC would fly on domestic routes.
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Over the years, AI inducted many more aircraft in its fleet and started flying to virtually all parts of the globe. AI also has the distinction of being the first airline from Asia to fly the Boeing 707 aircraft in the early 1960s. Its mascot, the portly Maharaja, captured AI’s journey across the globe. In a trendsetting marketing campaign, the Maharaja was used in ads showing him next to the Big Ben when AI started flights to London and next to the Eiffel Tower when the airline started flights to France, and other locales once the campaign and proved a big hit with international travellers.
In its heyday, Air India did much more than ferry people. It put India on the global map by acting as its brand ambassador. The king and queen of Sweden flew the Maharaja as did Pope Paul VI when he travelled to India in 1964.
It was not just the elite that Air India served. The flights to Wuhan to get back Indians stranded there due to the coronavirus outbreak last year were the latest in a long series of evacuations that the Maharaja has undertaken. The most significant of these was in 1990 when it brought back over 150,000 Indians from Iraq and Kuwait when conflict broke out there, a feat that earned it a place in the Guinness Book of Records.
Indian Airlines was meanwhile connecting the length and breadth of India. By 1956-57 or just three years after it was created, IAC in an advertisement said it had logged 19,201,903 miles (30,902,468 km) by air, carrying 571,106 passengers apart from carrying 50,194 tonnes of cargo and 5,221 tonnes of mail.
At the end of the next decade, India Airlines was operating over 100 flights a day over a route network that covered over 36,000 km; the airline claimed it was carrying one million passengers annually, making it one of the largest domestic airlines in the world.
However, the good times for Air India and Indian Airlines were soon to come to an end. According to old-timers, the Maharaja's fall started when its running was over to officials selected by the Ministry of Civil Aviation. Air India’s chairman and managing director were appointed by the ministry for the first time in the late 1980s. Officials were selected from outside the airline to also head important positions including sales and marketing and commercial operations.
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What also contributed to AI’s downfall was more airports being named international airports. When AI was at its peak there were a handful of international airports including—Delhi, Mumbai and Calcutta. All international airlines, including those of Air India, landed and took off from these airports. Passengers wanting to travel from London to Madras, now Chennai, had to come to Delhi or Mumbai and then take a domestic flight on Indian Airlines to reach Madras.
The naming of more international airports in India changed all that as air services bilaterals with foreign countries had to be exchanged so that traffic between India and these countries could increase. India followed a liberal policy on the exchange of bilaterals.
But what really added to the woes of Air India and Indian Airlines was the merger of the two into Air India in 2007. In the year preceding the merger, Air India reported a marginal profit of Rs 14.94 crore, Indian Airlines’ profit stood at Rs 49.50 crore. In 1997-98, while Air India reported a loss of Rs 181.01 crore, Indian Airlines made a profit of Rs 47.27 crore. Air India made a loss in the following two years while Indian Airlines reported profits. In 2006-07 Air India posted a loss of Rs 447.93 crore while IA posted a loss of Rs 240.49 crore. In the first year following the merger, the new entity posted a loss of Rs. 2,226 crore (see table).
The situation for AI and Indian Airlines kept going from bad to worse. Both international and domestic skies opened up and the two had to now deal with intense competition from newer players apart from other established rivals.
Air India’s net loss rose to Rs 8,556.35 crore in 2018-19, against a net loss of Rs 5,348.18 crore in 2017-18. In 2018, Air India’s debt stood at Rs 52,000 crore. A government survey tabled in February 2020 said Air India was among the three public sector units that incurred the highest losses for a third consecutive year in 2018-19.
The government has given the airline a bailout package in excess of Rs 30,000 crore and infused equity capital of Rs 3,430 crore over the years.
However, all this did not help the Maharaja and finally the government decided to sell its stake and pass on the baton of running Air India to private players.
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