The Tata group took control of Air India from the government in January 2022.
Amid severe headwinds due to the West Asia conflict, the Air India top brass assured the airline’s workforce that it is not anticipating any layoffs, but calling for a relentless focus on saving costs, according to sources. The Tata group airline also announced that the annual increments will be deferred by at least one one quarter due to the uncertain and volatile economic and operating environment although it will proceed with bonuses for the last financial year and implement the planned staff promotions, it is learnt.
Following the Air India board meeting on Thursday, in which cost-optimisation measures were deliberated upon, the airline’s chief executive officer Campbell Wilson, chief human resources officer Ravindra Kumar GP, and chief financial officer Sanjay Sharma addressed employees in a town hall meeting on Friday. For the time being, more drastic cost rationalisation measures like furloughs and layoffs have not been taken, it is learnt. Air India has an employee strength of about 24,000.
The Tata group took control of Air India from the government in January 2022. For FY26, the airline’s losses are estimated at a record Rs 22,000 crore—more than double the loss in FY25—primarily due to the extremely challenging cost and operating environment, it is learnt.
According to sources with direct knowledge of the matter, Wilson spoke about the significant external challenges that the airline industry is grappling with, and the impact of those challenges on Air India. “We need to focus relentlessly on our costs in these tough times…There must be a laser sharp focus on eliminating wastage and leakages,” Wilson is learnt to have told the Air India staff on Friday. He also asked them to suspend discretionary spending, renegotiate rates where feasible, and defer non-critical expenditures.
The West Asia war, which began on February 28, has led to major airspace disruptions in the Gulf region, which accounts for a significant chunk of international air traffic to and from India. The region also serves as a critical corridor for Air India’s flights to Europe and North America, which means that apart from disrupting operations to destinations in West Asia, the war has forced the airline to take longer, circuitous routes to Europe and beyond.
This is leading to higher operating costs, particularly due to additional fuel burn at a time when jet fuel prices are also surging due to war-related supply disruptions. The West Asian airspace closures have added to complications for Indian airlines, which had already been grappling with the continued closure of Pakistan’s airspace since late April of last year. In the face of these challenges and mounting costs, Air India has already partly curtailed its international flight schedule.
Wilson told employees that apart from the Pakistani airspace closure and the West Asian airspace disruptions, a sharp depreciation of the rupee against the dollar and two-and-a-half to three times jump in jet fuel fuel prices have adversely impacted demand as well as consumer confidence, per sources. The surge in ATF prices for international flights have forced Air India and other Indian airlines to significantly hike fuel surcharges on international flight tickets.
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Even before the West Asia war, jet fuel accounted for about 40% of Indian airlines’ operating costs. The conflict and its impact on fuel prices has led to a jump in the fuel’s share in the carriers’ cost structure.
Sharma is learnt to have told employees that while strong revenue growth and fleet expansion drove financial momentum through 2024-25 (FY25), FY26 saw a softening in revenue amid heightened external uncertainties. This follows a period of robust performance, with Air India’s revenue growing by a compounded annual growth rate of about 40% between 2022 and 2025.
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