Air India, under the ownership of the Tata Group, is reportedly undergoing a significant downsizing and restructuring in response to mounting financial losses. The airline is deferring aircraft deliveries, cutting flights, and postponing expansion plans, including re-evaluating new domestic and international destinations. This shift follows instructions from the Tata Group to prioritize reducing record losses, which have accumulated to over $5.8 billion since 2022, with a combined loss of approximately $2.6 billion (₹22,238 crore) in FY26 for Air India and Air India Express. Air India alone accounted for about $1.8 billion (₹15,368 crore) of that loss. These measures come after challenges such as a fatal crash, Pakistan closing its airspace, the war in Iran, and a weak Indian rupee contributing to increased fuel costs and operational disruptions.
As part of its strategy, Air India is increasingly transferring smaller-city and regional domestic routes to its low-cost carrier, Air India Express. This move aims to position Air India as a full-service, premium, and international-focused airline, while Air India Express handles price-sensitive domestic and short-haul markets. For example, Air India stopped servicing seven cities—Coimbatore, Bhopal, Chhatrapati Sambhajinagar, Madurai, Tirupati, Jodhpur, and Jamnagar—in August, with Air India Express taking over these routes and connecting them to major hubs like Delhi, Mumbai, Chennai, and Hyderabad. Analysts believe this reallocation makes economic sense, allowing Air India Express to feed passengers into Air India’s international hubs and strengthen a hub-and-spoke model.
In addition to network changes, Air India is considering workforce rationalization, with proposals to reduce flight operations by 15-20% and potentially cut 5-7% of its overall workforce, which currently stands at around 24,000 professionals across the Air India Group. The airline has also sought additional funding support exceeding $1.1 billion (₹10,000 crore) from stakeholders. Tata Sons and Singapore Airlines are reportedly close to providing $1.1 billion in fresh financial support, tied to performance milestones. The airline's profitability target has been pushed towards 2030, with combined group losses potentially exceeding $1.8 billion (₹15,000 crore) in the fiscal year ending March 31, 2026, if current cost pressures persist.
Air India Express attributed its FY26 losses, which were about $800 million (₹6,767 crore), to external factors such as geopolitical disruptions, operational incidents, and currency volatility, describing them as "one off" and temporary. The airline has a fleet of 108 aircraft, while Air India has 185. The restructuring also coincides with a leadership change, as outgoing CEO Campbell Wilson has stepped down and Tewolde Gebremariam is set to take over.
