How Nehru Govt Took Air India From JRD Tata

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1^st license Tata

Air India was founded by J.R.D. Tata and he was the first Indian to procure a flying license in 1929, at the age of 25, and own a Gipsy Moth aircraft soon after.
He was the first Indian to pilot a plane from India to England in 1930, that too, devoid of any equipment modern flying machines are equipped with.

He was the first to launch an air-cargo service between Karachi and Bombay, doing so under Tata Aviation Service in 1932, which was followed by the commercial Tata
Airlines the very next year.
Those who worked closely with him say he had the vision to realise two things.
First, that air travel would become economic only if it could be made into a mass market, large scale industry; and second, that Air India would participate effectively in air travel only if it could offer something unique to travellers.
Profit was not the propelling factor in J.R.D’s thinking.
He wanted Air India to offer something special if it was to survive internationally.

Ironically, the Indian government was initially proud of the Tatas and the way they were running Air India.
It was the only shining jewel India had when the British left in 1947.
Having launched Air India in the 1930s, JRD Tata hoped free India would help Air India scale newer heights. It was not to be.
After Independence, Pan American and Trans World Airlines, along with KLM, Air France, etc. began flying to India.
But it was Air India that flew the diplomat Vijayalakshmi Pandit, Nehru’s sister, to Moscow as independent India’s first Ambassador.
She wrote glowingly of the airline’s standards of service.
JRD had proposed to the government that an international service be started under a sister concern, Air India International.
To his pleasant surprise, the government agreed — and Air India International’s first flight to London took off in June 1948 with JRD himself on board.

Air India was gaining in popularity, and the government was keen to see it grow.
So Rafi Ahmed Kidwai, the minister for communications, suggested a postal service connecting the four corners of India, with Nagpur in the centre of the country as the hub for overnight sorting.
It was a good idea — but JRD pointed out that night landing facilities needed to be set up before Air India could look into the proposal.
The government disagreed — and it was adamant.

After the end of the war, the United States had offloaded many Dakota aircraft into the market, and industrialists of all stripes had jumped into aviation, with or without experience of running such a business.
In India, where barely a few companies could survive, more than a dozen airline companies came up.
JRD called a meeting of Air India, Air Services of India, Airways (India), and Indian National Airways to jointly oppose the idea of an overnight postal service.
Kidwai, who was hell bent on starting the service, was extremely upset.
He went ahead and launched a new service called Himalayan Aviation in 1948.
In response, JRD wrote an open letter to the minister, demolishing his claims about profits.
A furious Kidwai determined to teach JRD a lesson.

Seeing things going out of hand, Nehru stepped in and publicly declared that the Tatas were doing a fine job, and that Air India had been praised widely for its efficient and friendly service.
To defuse the situation, the prime minister suggested setting up a committee to look into JRD’s proposal.
The committee, under then Chief Justice of Bombay High Court G S Rajadhyaksha, reprimanded the government for having issued licences without thinking of economic feasibility.
“Where four companies cannot survive, indiscriminately issuing licences to a dozen more is arbitrary,” it said. JRD’s stand was vindicated, but the government was antagonised.

Soon began a clamour for Air India’s nationalisation.
In an interview to the Associated Press, JRD said nationalisation of any sector was not good for the country — it would lead to politicisation, which would be disastrous.
Bureaucrats working for nationalised companies reported to the concerned ministry, and could never take independent decisions.
He sent a copy of the interview to Nehru hoping the prime minister would have second thoughts. Nehru did nothing.
Soon, as JRD had feared, two companies, Ambica Airlines and Jupiter Airways, declared bankruptcy.
Finally, the day arrived in 1952 when all the aviation companies were to be merged into one and run by the government.

As a last ditch attempt, JRD suggested forming two companies: one for the domestic sector, the other for international operations.
He worried that all companies would be measured by the same yardstick, and he did not want Indian aviation’s reputation to be ruined outside the country.
But Nehru and his government did not want to listen.
JRD appealed to the government to appoint an independent committee to compensate the companies which were being merged.
That too was rejected. JRD was deeply disturbed.
But it wasn’t over yet.
At a meeting with the minister for communications, Jagjivan Ram, JRD asked: “Do you think it is easy to run an airline just the way you run other departments? You will see for yourself.” Jagjivam Ram replied coolly: “It may be a government department, but we want your help to run it.”
This was rubbing salt into JRD’s wounds — to first gobble up his enterprise, and then ask him to run it.
Nehru tried to pacify JRD, but it was of no use.
The government did not pay the Tatas their rightful compensation.

Tata lost control of the airline when it was nationalized in June 1953.
In February 1978, J.R.D. was dropped from the re-constituted board of both Air India and Indian Airlines, a matter that caused him a lot of heartache.
“I feel like a father whose favourite child has been taken away from him,” on Morarji Desai government’s decision.
Indira Gandhi she reinstated him on the boards of both the airlines in April 1980, where he remained until 1982.

Q) Stabilization measures and Structural reform measures are the two groups of which policy?