New Delhi: Air India is increasingly exiting smaller-city and regional domestic markets in favour of its low-cost carrier Air India Express, as the Tata group sharpens the roles of its two airlines and looks to focus Air India on international, long-haul and the major metro markets.
In August, Air India decided to stop servicing seven cities—Coimbatore, Bhopal, Chhatrapati Sambhajinagar (Aurangabad), Madurai, Tirupati, Jodhpur and Jamnagar—which its budget carrier Air India Express took over, according to two people familiar with the group’s network strategy.
Select routes, including Mumbai-Kochi and Kochi-Delhi, have also transitioned to the low-cost carrier.
The decision on Air India moving away from some smaller cities was taken under its outgoing chief executive, . It is to be seen whether his successor, Tewolde Gebremariam, who held his first townhall with employees on Monday, will continue with this strategy.
So far, it has been a conscious strategy for Air India’s increased focus on international and long-haul destinations and key metro routes, while takes on a larger role in the regional markets and feeds passengers into the group’s major hubs.
The latest move in this direction was on 1 September, when Air India Express started operations at the above six destinations. It new services connect these cities with Delhi, Mumbai, Chennai and Hyderabad.
The low-cost airline operated at 46 domestic and 17 international stations and with 474 daily flights in fiscal year 2026 (FY26). It has added 16 destinations between FY26 and FY27 year-to-date. Nine of these were added in FY26.
The airline carried over 26 million passengers in FY26, including nearly 20 million on domestic routes, according to the airline’s filing with the corporate affairs ministry last month.
Transition moves
The transition between the two Tata airlines has been underway for more than two years, one of the two persons said.
In 2024, Air India Express had already outlined a strategy focused on metro-to-tier II and tier III connectivity, while Air India concentrated on trunk routes such as Delhi, Mumbai and Bengaluru and long-haul international markets. Agartala and Port Blair were among the smaller markets added to the Air India Express network during that phase.
The process gathered pace in 2025, when Air India withdrew from Imphal, with Air India Express continuing to serve the market. Air India subsequently reduced its presence on the Bengaluru-Hyderabad route, with the low-cost carrier taking over part of the capacity.
and Air India Express are yet to respond to queries from Mint.
Analysts said the reallocation makes economic sense if the right routes are moved between the two carriers.
“We believe it makes economic sense, provided the right routes are shifted. Air India is increasingly being positioned as a full-service, premium and international-focused carrier, while Air India Express is structurally better suited to thinner, price-sensitive domestic and short-haul markets,” said Jainam Shah, analyst at Equirus Securities.
Shah said the bigger opportunity was not just cost saving but better fleet and network utilization. Air India Express could increasingly feed passengers from smaller cities into Air India’s international hubs, strengthening the group’s hub-and-spoke model, he said. The challenge would be coordinating schedules and ensuring the economics of feeding long-haul flights work.
The financial backdrop makes the exercise more important.
Air India and Air India Express together reported a net loss of ₹ 22,238 crore in FY26, more than double the previous year, while combined revenue fell nearly 9% to ₹ 71,870 crore. Air India accounted for a ₹15,368 crore loss and Air India Express another ₹6,767 crore.
In its annual report, Air India Express attributed its losses to external factors, which included geopolitical disruptions, operational incidents and currency volatility. It said the FY26 losses were “one off” and temporary. The airline that its management had drawn up a corrective plan, including cash flow projections, funding plans, and expansion and rationalization of the fleet.
Air India Express had a fleet of 108 aircraft in FY26, while Air India had 185.
The restructuring comes at a leadership inflection point. Wilson, who led Air India through its initial integration and fleet-modernization phase, has stepped down. , former Ethiopian Airlines chief and the chief executive officer (CEO) designate, was introduced to employees on Monday. He is awaiting mandatory security clearance and is expected to take over soon.
Air India had earlier said the leadership change marks a shift from its “foundational turnaround phase” to an execution and expansion one, with Gebremariam bringing experience in long-haul networks and hub operations.