The change in strategy is an abrupt pivot from an ambitious growth plan. It reflects the loss of confidence in an airline that suffered a fatal crash a year ago and has since incurred an annual loss equivalent to about $3 billion.
Also read: Air India says 96% of Ahmedabad crash victims’ families have received interim compensation
The downsizing will involve a variety of efforts to reduce costs. Air India is in discussions with Airbus SE and Boeing Co. to slow down deliveries of as many as 500 planes previously ordered, said the people, who asked not to be identified because the talks are private. Doing so would enable Air India to push back the large payments due to plane makers upon delivery.
The carrier is also reevaluating plans to fly to new domestic and international destinations, pruning some routes and postponing launches at some airports, such as the new Noida International Airport near New Delhi, the people familiar with the matter said.
Air India’s cowed ambitions follow a series of challenges that have pushed it deep into the red. The deadly crash last June, Pakistan closing its airspace to Indian carriers, and the war in Iran have disrupted flights, forced costly rerouting and driven up fuel expenses. The weak Indian rupee has also added to its financial woes since much of the airline’s costs are in dollars.
The Tata Group, which took over the national carrier in 2022, now wants Air India to temper its growth strategy to focus on stabilizing current operations and implement cost-cutting measures, people familiar with the matter said. Air India earlier this year announced flight cuts due to the Iran war and airspace shutdowns.Also read: Boeing, civil aviation minister issue key statement on Air India AI-171 crash probe
An Air India spokesperson said the Bloomberg queries were highly speculative, and the carrier remains committed to modernizing its fleet and carrying out its long-term transformation plan.
Tata and Airbus didn’t respond to requests for comment. A Boeing spokesperson declined to comment.
The flag carrier, which operates its namesake Air India full-service airline and low-cost arm Air India Express, has been losing money for more than a decade even though revenue and operations have grown on the back of the country’s strong economic expansion and surging travel demand.
Air India previously ordered a combined 600 aircraft from Airbus and Boeing during 2023 and 2024, and then put in more orders early this year as part of an aggressive fleet expansion. The bulk of its deliveries are expected in 2027 and 2028, the people said.
Airlines typically spread out payments for jets over several years, with the biggest cash outlay — which can be about 80% of the purchase price — coming when they are handed over.
Air India has accumulated more than 550 billion rupees ($5.8 billion) in losses since 2022, with the red ink becoming a key concern for the board of Tata Trusts, which controls the Tata Sons holding company that holds the majority of Air India. Singapore Airlines Ltd. bought a 25.1% stake in Air India in 2024.
