Air India: Can the Tata Group airline fly past the turbulence?

THERE IS AN urban legend about Air India. Back in the 1940s and 1950s, residents in Geneva set their watches to an Air India flight flying past the Swiss city. Such was the punctuality and service of the airline in those days, a few decades after J.R.D. Tata set up Air India, which even served as a blueprint for the government of Singapore when it decided to start an airline, that later became Singapore Airlines. Those, sadly, are urban legends harking back to a time when Air India defined what commercial aviation was all about. Cut to today, and the only thing in common with those days is that the airline is back with the Tata Group. And in place of urban legends, what remains are a string of misfortunes — such as a ‘peegate’ incident on a long-haul flight and an aircraft returning after being airborne for eight hours because the airline reportedly sent the wrong aircraft! “Brand Air India certainly needs to get its act right,” says brand expert Harish Bijoor, founder of Harish Bijoor Consults Inc. “One of the issues has been that it has been a public sector airline. That image needs to change, and the best way to do so is through operational efficiency of every kind.” An unexplained crash last year of the airline’s London-bound AI-171 hasn’t helped matters. Over 260 people died in the crash, the first of its kind involving a Boeing Dreamliner. “After the crash, which still lives in recent memory, the airline needs to correct its imagery in totality,” says Bijoor. As if the crisis with brand reputation isn’t enough, Air India is also expected to announce a staggering ₹22,000-crore loss, the highest since the Tata Group took over. Air India is currently the biggest loss-making entity within the Tata Group. An announcement by the group that the current CEO, Campbell Wilson, will leave in July has only added to the woes and raised questions about whether Air India can truly turn around, despite the might of the Tata Group and the operational expertise of Singapore Airlines, which owns a quarter of the airline. Air India did not respond to a detailed questionnaire shared by Fortune India. “From an external perspective, the turnaround appears only partially successful; perhaps the glass is 30% full,” says Alok Anand, chairman of Acumen Aviation, an aircraft asset management and leasing company. “Progress over recent months has been hindered by operational setbacks as well as factors beyond Air India’s direct control. Rising fuel costs and persistent supply chain disruptions, already aggravated by the pandemic, the Russia-Ukraine conflict, and now the Iran-Israel-U.S. war, have created an exceptionally difficult operating environment.” As for the top job, in the running are Air India executives Nipun Aggarwal and Vinod Kannan. Aggarwal is the man mandated with the transformation of Air India since the Tatas took over; in many ways, he led the group’s acquisition of Air India. Kannan served as Vistara’s first Indian CEO. If Air India does decide to go with an Indian CEO, it will be in contrast with that of IndiGo, India’s largest airline, which has roped in Willie Walsh, the current director-general of IATA, in place of Pieter Elbers, who left the airline a few months ago after a spate of flight cancellations last December. House of Cards Air India came back to the Tata Group with much hype and hope. A white elephant when it was with the government, the acquisition was cherished by many, considering the conglomerate’s long-standing history with the airline. But the acquisition came with its own set of challenges. Air India had struggled for years with a lack of investment, poor service, overemployment, mismanagement, and a poorly timed merger with Indian Airlines, another government-owned airline. In effect, the airline was bleeding money. The Tata Group sprang into action after spending over ₹18,000 crore to acquire the airline, and announced the appointment of Wilson, a Singapore Airlines veteran, to helm the turnaround. A few months later, in September 2022, the airline put in place a turnaround plan called Vihaan.ai. According to the plan, the airline set clear milestones focussed on growing its network and fleet, developing a completely revamped customer proposition, improving reliability and on-time performance, and taking a leadership position. The company set a target to increase its domestic market share to at least 30% while significantly expanding its international operations. While the domestic market share now stands at about 26.2%, up from about 25% in 2023, the airline has seen its international market share slip, mopped up largely by IndiGo, particularly after the crash of the London-bound AI-171 in July 2025. “The crash exacerbated Air India’s problems,” says Shukor Yusuf, founder and primary analyst at Singapore-based aviation consultancy firm Endau Analytics. “Air India’s (turnaround) implementation is easier said than done.” In the process, questions were also raised about Wilson and whether he was an effective hire for the group. “It’s very easy for people to say, ‘Campbell Wilson didn’t do this or that’,” says a senior Air India official on condition of anonymity. “But if you look at him, he was never allowed to hire anybody. Everybody who reports to him is from the group company or was selected by the chairman (of Air India) himself.” Wilson announced his resignation in April this year, though it had been in the works for a few years, due to personal reasons. The Air India official says his exit had nothing to do with the turnaround. “He had communicated the decision as early as 2024.” Still, in his four-year tenure, Wilson had consistently maintained that the turnaround was indeed a lengthy one, and drawing parallels with cricket, had said that the process was similar to playing a Test match where even the ones and twos were critical to keep the scoreboard ticking. Not all that bad Still, in its own way, Air India has achieved a fair bit over the past four years. It merged four airlines into two, a massive achievement given the diverse work cultures. But it also meant that, compared to its rival, IndiGo, Air India now had various types of aircraft to operate, which increases operational costs. By the end of 2024, Air India completed the four-way merger to create two airlines, a low-cost carrier and a full-service one. Air Asia India was merged with Air India Express to create a low-cost carrier, and Vistara was merged with Air India to form a full-service carrier. The merger also meant that Singapore Airlines took a 25.1% stake in Air India, with Air India Express being its fully owned subsidiary. “One of the greatest risks in a merger of this magnitude is execution risk, and that appears to have become evident through the cultural and operational differences between the merged entities,” says Anand of Acumen. “Air India’s leadership has had to divide its focus between day-to-day operations and the complexities of integration, while IndiGo, in comparison, has largely continued operating under business-as-usual conditions.” Simultaneously, Air India also ordered a record 470 aircraft, only for IndiGo to up the ante a few days later, ordering some 500 aircraft. Air India’s orders comprise 34 A350-1000, six A350-900, 20 Boeing 787 Dreamliners, and 10 Boeing 777X widebody aircraft, as well as 140 Airbus A320neo, 70 Airbus A321neo, and 190 Boeing 737MAX narrowbody aircraft. But even as it waited for the aircraft to join its fleet, the company had begun a $400-million retrofit programme for many of its older aircraft, which had been plagued by underinvestment. The idea was to change customer perception about the old and shabby planes, with a Tata touch. But supply-side shortage has meant many of its aircraft continued to be plagued by issues such as broken armrests, dysfunctional chairs, and non-functional in-flight entertainment systems. Consultancy firm McKinsey reckons that only about 7,000 aircraft were delivered from 2019 through 2024 — far below the pre-pandemic trajectory, which, if it had continued, would have resulted in about 12,000 aircraft over that same time frame. “The airline has been successful on some aspects such as digital interface with customers, website, app- and customer-facing platforms by using artificial intelligence,” says Amit Mittal, director at aviation consultancy firm AeroIntellect Aviation. “However, there are work-in-progress [areas] such as fleet expansion and aircraft retrofits, which are largely dependent on OEM and technical aspects.” Over the past few years, other troubles for the carrier have seemingly hurt its public perception. Still, it was the crash of flight AI-171 that jolted the turnaround programme, with passenger confidence taking a hit. While the airline has bounced back from the crash, it is now staring at newer troubles. Airspace restrictions, stemming from Pakistan’s closure after the Pahalgam attacks and the recent crisis in West Asia, have forced it to take longer routes to many international destinations, resulting in increased fuel burn. Air India has had to curtail many of its routes and set up additional bases to serve its long-haul routes. Rationalising routes On May 13, the airline announced a rationalisation of its international operations, reducing frequencies on 29 routes until August. These include the suspension of its Delhi-Chicago flight and the reduction in the frequency of the Delhi-Paris flight from 14 to seven times a week, among others. The airline will operate 1,200+ international flights every month, down from 2,500 earlier. “This has been an exceptionally difficult year for the aviation industry globally, and particularly for Indian carriers,” says Anand. “Even under an optimistic scenario where current external pressures ease soon, it will still take several months for operations to normalise. There are also early signs of oversupply in the aircraft market, as airlines defer deliveries and carriers such as Spirit Airlines in the U.S. have shut shop,” he says, adding that the effects of this imbalance are likely to become more visible in the coming months. “It will be interesting to see whether IndiGo and Air India continue extending older leases or begin returning aircraft this year.” Another major issue has been the rupee’s depreciation. It is down by more than 10% against the U.S. dollar, which pushed up payouts for aircraft lease rentals and aircraft and engine maintenance. Already, the Federation of Indian Airlines (FIA), an industry body representing Air India, IndiGo, and SpiceJet, which together account for more than 90% of the domestic market, had written to the government seeking urgent intervention. “The airline industry in India is under extreme stress and is on the verge of closing down or of stopping its operations,” the FIA had said. The Modi government, in turn, approved an emergency credit line of ₹5,000 crore for airlines. In April 2026, oil companies had hiked ATF prices by more than 115%, with the rates doubling to a record ₹2.07 lakh per kilolitre. Soon after, the government capped the price hike at ₹15 per litre to ensure partial pass-through and avoid a steep rise. All that has meant that India’s air passenger traffic is only expected to grow only a tad, between 0% and 3%, during 2025-26, with net losses for the aviation industry pegged at ₹17,000-18,000 crore in FY27. A war-time CEO For now, Air India has already put in place austerity measures, deferring annual salary increments for employees by at least one quarter. With losses mounting, the turnaround is also in jeopardy. Mounting pressure from shareholder, Singapore Airlines, is also likely to be a cause of worry. “The biggest challenge is the financial turnaround,” adds Mittal. “The situation calls for a ‘war-time CEO’, a leader capable of navigating both a hostile external environment and the internal challenges already outlined,” says Anand. “Stabilising operations and establishing a credible path to break-even should be immediate priorities. More than operational expansion, success will depend on making disciplined strategic choices, including where to focus resources, whether on strengthening domestic operations first or maintaining emphasis on international long-haul markets. At present, both segments remain under pressure.” That means it’s going to be a long-drawn fight and a trial by fire for whoever steps into the role. “Whoever is ultimately chosen to lead Air India should ideally be given a multi-year mandate along with sufficient operational autonomy,” adds Anand. If anything, the Tata Group has made a habit of tiding over turbulences. It is Air India’s turn now.

Air India: Can the Tata Group airline fly past the turbulence?

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