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Tatas ground aviation plans

Reeba Zachariah in Mumbai

The Tata group has decided in principle not to venture into the aviation business. Therefore, when national carrier Air-India is put up for divestment again, the Tatas will not bid for it.

R K Krishna Kumar, a director of Tata Sons and member of Group Corporate Centre, the central policy-making body of the Tata group, said, "The group has decided against entering the aviation sector in future."

He said the decision was taken because of fuzzy government policies on aviation, and in view of large investments planned by the group in the telecommunications sector.

The Tatas have been planning to re-enter the aviation business since 1995. But plans to set up a domestic airline along with Singapore Airlines were grounded in 1997 because of serious differences with the civil aviation ministry.

A move to revive the proposal by going alone was, however, abandoned the next year.

The group again bid for A-I when it came up for divestment in 2000. The Tatas partnered with Singapore Airlines this time, but the latter walked out of the consortium.

The group then tried to rope in Delta Airlines and Air France to form a consortium. However, the September 11 attacks last year on the US dealt a blow to the A-I divestment plans, which was then grounded.

Tata Sons and Indian Hotels would have put in the funds if the group's bid for A-I had been successful.

The Tata group's focus is now heavily skewed towards the telecommunications and information technology business. It has a committed investment plan of around Rs 14,000 crore (Rs 140 billion) in telecommunications.

A significant portion of the equity contribution is to be made by Tata Sons and Tata Industries, the group's two main holding companies.

Tata Consultancy Services, Asia's largest software company and the group's most profitable company, is also scouting for acquisitions abroad.

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