In today's newsletter we talk about the final chapter (hopefully) in privatising Air India and TikTok.
The Air India Conundrum
On Wednesday, Union Civil Aviation Minister Hardeep Singh Puri said that it would be difficult to run Air India without privatising it. “If we don’t privatise Air India, where will we get the money to operate it? Right now, Air India is a first-class asset and we will get bidders if we sell it. And if we take ideological positions, then it will be difficult to run it”
For three decades until the mid-1980s, state-owned airlines (think Air India and Indian Airlines) made considerable sums of money for the government until they started letting in private players enter the civil aviation sector to increase airline penetration in India. Once private players entered the market, more Indians took to the air than ever before and a slew of profitable private airlines emerged during the 90s. However, that was the death knell for state-owned airlines. While private airlines increasingly veered towards a low-cost model, Air India continued to fly despite incurring heavy losses, thanks to a benevolent government that could always support it with taxpayer money. But despite repeated attempts to revive the airlines and push it towards a path of profitability Air India continues to bleed money while piling on enormous amounts of debt.
And considering the current government is now cash-strapped, a full sale is inevitable. But buyers have been unwilling to put up the money needed to buy the beleaguered airline because they’d have to take on the $11 Billion dollar debt burden that comes with it. In fact, last time the government tried to sell Air India, there was hardly anyone interested. So the plan now is to exclude $7 Billion dollars in debt and sell the airline with a fraction of the original debt in tow. And the story goes that they want to start inviting EOI's (Express of Interest) as early as Dec 15.
But what if the sale does not materialize? Does that mean the Maharaja finally shuts shop? You tell us.
TikTok and Education?
Also, there's been a lot of talk about TikTok's plan to enter the ed-tech space in India. And we want to see what's brewing here.
When you think of TikTok, you’re probably thinking dramatic hair flips, overenthusiastic attempts at slapstick comedy and other videos that keep you scrolling for hours, even as you mock the creators. But rumour has it that TikTok is looking at a makeover. More specifically by foraying into education.
For the uninitiated, Tik Tok is a social media platform for creating, sharing and discovering short music videos mostly with some funky recorded music playing in the background. I am sure you’ve noticed some young chap lip-syncing to a popular Bollywood song with melodramatic expressions. Yeah, that’s TikTok. (Or maybe ShareChat, but most likely TikTok)
With hundreds of millions of users in India, TikTok has taken the country by storm. The hopelessly addictive format (15 secs to 1 min vids) coupled with a burgeoning class of new-age content creators have turned TikTok into a marketing hubspot. Advertisers are now tailoring content specifically for the short attention spans of the audience and small-town folks are turning into recognizable brands. So TikTok by all accounts is surging in popularity.
But this popularity comes at a price. Earlier this year, an Indian court banned TikTok, alleging that it was hosting and promoting pornographic content. The ban was later lifted, but TikTok realized that a perception realignment was in order. And isn’t educating the masses the best way to add undeniable value?
The only problem it seems is TikTok’s format. Right now the platform only allows for videos spanning 15 seconds. You could string four videos together and you have a minute worth of video real estate. But these Byte-sized videos aren’t good enough to explain deeply complicated subjects, at least as things currently stand.
Granted, there is also the perception problem as many people see TikTok as a frivolous endeavour devoid of any seriousness. But with the sheer size of their existing audience base, I am sure they’d want to give it a shot.
So will we see a new giant emerge in the ed-tech space soon? You tell us