New Delhi: Less than a month after taking over as chief executive of Air India, Tewolde Gebremariam has initiated belt-tightening measures to counter mounting losses and rising operating costs. The airline has set up a dedicated team to identify cost savings across the group and tightened spending approvals, even as external shocks complicate its turnaround efforts. The Air India Group includes the flagship airline and its budget carrier, Air India Express.
The measures were announced on 12 October via the company’s internal digital noticeboard, Workplace, according to an executive familiar with the development. Mint has reviewed a copy of the communication.
“To support this effort (cost cuts), a multidisciplinary, cross-functional cost savings team has been established on full-time basis to identify cost-saving opportunities across the organisation,” Gebremariam wrote to employees. “Effective 1 October, all approvals will now be routed through the HOD, CXO and CEO, ensuring greater rigour, transparency and alignment in decision-making across the organization,” he added.
The measures mark a shift in priorities under Gebremariam. Under his predecessor Campbell Wilson, who led Air India after its return to the Group in 2022, the focus was on rebuilding the airline, integrating Vistara with Air India and AirAsia India with Air India Express, placing large aircraft orders, and modernizing the fleet. Gebremariam’s task is to convert that investment into better operational performance and sustainable profitability.
The cost-cutting push follows Gebremariam’s first town hall with employees on 28 September, where he outlined a shift towards profitable and sustainable growth. He emphasized boosting revenue productivity — including revenue per available seat kilometer — and controlling costs, while prioritizing safety, operational reliability, and better coordination across the group. The new team and tighter approval matrix give that-discipline agenda a more formal structure.
Operational hurdles
In his Workplace message, Gebremariam acknowledged the external pressures. “While many external factors remain beyond our control, how we manage costs is something each of us can influence every day,” he said. “ savings cannot be driven by a single team or function alone; it requires the active participation and commitment of every employee.” The team will “systematically review all expenditure and identify cost-saving opportunities across functions”, he added.
To this end, an employee reward scheme will recognize ideas to reduce costs or improve revenue, including contract renegotiations, better resource utilization, procurement improvements and waste reduction.
External disruptions have also raised the cost of operations. The closure of Pakistani airspace since April 2025 has forced Air India to take longer routes on several westbound services, increasing fuel consumption, flying time and crew costs. Wilson had estimated the impact at around ₹4,000 crore over a year. The West Asia conflict has added to the operational disruption, while supply-chain shortages have delayed parts of the fleet-modernization programme. The AI-171 crash in June last year brought the airline under increased regulatory scrutiny.
“Ongoing airspace closures, the conflict in the Middle East and its resulting operational disruptions, and persistently high jet fuel costs continue to place significant pressure on airlines across the industry,” Gebremariam wrote.
Higher fuel costs have added to the pressure. Delhi aviation turbine fuel prices rose about 13% in October to around ₹137 per litre, following consecutive monthly increases. Air India, Air India Express, IndiGo and Akasa raised fuel surcharges on domestic and select international routes from 9 October.
Gebremariam said savings would help the airline reinvest in operations and customer experience. “Every rupee we save creates an opportunity to reinvest in areas that matter most, whether it is enhancing our operations, improving our products and customer experience, or strengthening the foundations for our future growth,” he wrote.
Mounting losses
Air India Group reported a consolidated net loss of ₹22,238 crore in FY26, more than double the ₹10,859 crore loss a year earlier. Air India reported a standalone net loss of ₹15,368 crore on revenue of ₹51,452 crore, while Air India Express posted a net loss of ₹6,767 crore on revenue of ₹19,088 crore. Group revenue was ₹71,870 crore, including contributions from subsidiaries such as catering, ground handling, and its GIFT City entity.
Forex losses compounded the pressure. Air India reported a forex loss of ₹5,033 crore in FY26, compared with ₹1,299 crore a year earlier, while Air India Express incurred a forex loss of about ₹2,370 crore, according to its regulatory filings. Currency movements have added to the burden of aircraft leases and other dollar-denominated expenses.
Tata Sons has invested ₹45,347 crore in Air India since taking ownership in January 2022. Its board has approved in principle a further capital infusion of more than ₹10,000 crore, subject to business cases for the funding, an executive familiar with the development said.