After the end of the World War II, the Government of India felt that they should have their own external Air Services without collaboration with United Kingdom.

Air India formerly known as Tata Airlines was owned by Tata Sons Ltd., which being foremost indigenous Airlines of India, had operated its First Commercial Air Service as far back as on 15th October 1932. On 29th July 1946, Tata Airlines came to be known as Air India Ltd. All assets and liabilities of Tata Airlines were taken over by Air India Ltd., at a cost of Rs.39,46,116/-. The authorised capital of Air India Ltd., was Rs.50 millions of which Rs.15 millions was issued and paid up about the end of 1947.

The Air India Ltd., got the novel distinction of carrying Indian Flag for the first time ever in the sky, when the first Indian Ambassador to Moscow, Mrs.Vijiya Laxmi Pandit left India to take up her post in the Air India Fight DC-3VT-AT 1.

The Air India Ltd., submitted a proposal to the Government of India a scheme for the establishment of Air Services between India & U. K. The scheme contemplated the formation of a new company.

Air India International (A.I.I.) registered on 8th March 1948, with an authorized capital of Rs.70 millions and a paid up capital of Rs. 20 millions, of which the Government of India subscribed 49% and had on option to acquire a further 2% at any time. Air India Ltd., took 10% of the capital. The balance was subscribed by the public as well as other air transport carriers. The Air India Ltd., was appointed the General Technical Managers and Chief Booking Agents for a period of 10 years. Air India International Ltd., would have exclusive rights of operation over all routes to the West of India within a specified zone for a period of 10 years. The Government of India guaranteed to reimburse to A.I.I. Ltd., any loss incurred by it, after making provision for depreciation for a period of 5 years.

The Bombay - London Air Service of A.I.I. Ltd., was inaugurated on 8th June 1948. This was the blessed day, when Free India Tri-colour began flying in the sky outside India. From 8th to 31st December 1948, A.I.I. made 40 return flights on Bombay - London sector and flew 4,11,000 miles, 2600 passengers, 81170 pounds of mail with 83516 pounds of cargo.