Airline giant eyes backend consolidation to stem rising financial losses.

Air India plans to merge backend functions with its low-cost arm to reduce costs.

Air India plans to merge specific departments with Air India Express. This strategic move aims to lower operational costs. The airline group recently reported a significant consolidated loss. This figure reached Rs 22,238 crore for the 2026 financial year.

The board recently gave initial approval for this structural change. Chief Executive officers now have the power to find more savings. High fuel prices have put pressure on the company. Furthermore, geopolitical tensions continue to affect global flight paths.

A new team is already searching for ways to cut costs. They are focusing on eliminating duplication across internal systems. Specifically, they look at technology and procurement processes. Shared resources may also improve the group’s negotiating power with suppliers.

Tata Group previously merged four brands into just two main airlines. AirAsia India and Vistara have joined the existing fleet. However, the remaining two carriers still operate as separate legal entities. This separation creates redundant back-end functions and administrative roles.

Better coordination of maintenance and training could significantly lower operating expenses. Better aircraft deployment strategies might also boost overall resource utilisation. Nevertheless, the final scale of this consolidation remains uncertain.

The airline industry faces many external challenges this year. For instance, airspace closures forced several international flights onto longer routes. Consequently, fuel consumption and aircraft usage costs increased sharply.

Experts suggest a common air operator certificate might provide more flexibility. This could simplify crew deployment and route planning across both brands. Such a change would likely involve complex regulatory hurdles. The transition period may also create human resource challenges.

Restructuring often requires extensive crew retraining. However, clear brand positioning remains vital for the low-cost carrier. Air India Express continues to expand its domestic presence rapidly.

(Source: Financial Express)

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