MUMBAI: The main owner of Air India, following the devastating flight 171 crash that became the most severe aviation disaster in a decade, will set up a welfare trust for affected families. Tata Sons, which owns about 74% of Air India, intends to allocate Rs 500 crore to the foundation, to be called AI171 Trust.
Sources indicate that Tata Trusts, the largest shareholder of Tata Sons, is expected to contribute an equivalent sum. The crash claimed over 250 lives, with 241 passengers on board and 19 individuals on the ground. Tata Sons and Air India have previously announced a joint financial assistance of Rs 1.25 crore to the families of the deceased.
Apart from Tata Sons, Singapore Airlines owns around 25% of Air India while the employee trust holds the remaining 1%. Sources said the Tata Sons board approved the welfare trust proposal on Thursday.
The next steps involve legal procedures, including registration of the public charitable trust, and formation of the board of trustees. Tata Sons chairman N Chandrasekaran is expected to lead the AI171 Trust, which will include non-Tata members.
This initiative mirrors Indian Hotels' (Taj chain) response to the 26/11 Mumbai terror attacks. The company established the Taj Public Service Welfare Trust in Dec 2008 to assist victims, families, security forces, and affected employees. The Taj Mahal Palace hotel lost 36 individuals, including staff members, during the attacks.
The Taj Public Service Welfare Trust subsequently broadened its scope beyond 26/11 victims, extending support to injured and specially-abled soldiers and to migrant workers, frontline staff and healthcare professionals during the pandemic.
The unscheduled Tata Sons board meeting on Thursday comes two days after its director and Tata Trusts chairman Noel Tata visited the crash site and injured patients in Ahmedabad.
The meeting took place 29 days subsequent to its previous board assembly. During the May 29 meeting, the board had approved the financial statements for Q4 and fiscal year ending March 31, 2025, while also approving capital investments over Rs 30,000 crore for new businesses, including semiconductor projects and Air India. Chandrasekaran, who is also the chairman of Air India, has increased his involvement in the airline's operations after the incident. His engagement includes interactions with govt officials, supervising safety assessments and aircraft maintenance.
Total compensation claims arising from the Air India crash could reach $475 million, driven by liability payouts estimated at $350 million, due to the involvement of over 50 foreign passengers.
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Reeba Zachariah is assistant corporate editor at The Times of Ind...
Read MoreReeba Zachariah is assistant corporate editor at The Times of India, Mumbai. She has been covering large Indian business houses such as the Tata Group. She also reports on a host of sectors like hospitality, retail, travel, liquor and consumer durables. She has been writing on mergers and acquisitions and private equity.
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