Sources close to the matter say Air India is set to put the brakes on incoming planes, do away with a few flights and hold off on some of its expansion for now. It’s a message from the parent company to focus on reducing losses. In an era of record financial pressure, it means making a profit is more important than hypergrowth.
Strategy reset and market positioning
Those in the know on the inside put it this way: the order of the day is to get current operations in order and keep a lid on spending before you add any more capacity. You’ll see them second-guessing some of the new airport debuts – like the one at Noida International near New Delhi – and having another look at the numbers for a number of planned routes.
It’s a change of tune from the kind of aggressive build-out we’ve seen before. Now it’s about being steady with the cash and running a reliable operation. You won’t see capacity added as fast as was on the books, but it’s all in the name of keeping the balance sheet in good shape.
Orderbook under review, payments pushed out
Not so long ago, Air India put out a big fleet plan, with 600 new planes on order from Airbus and Boeing over 2023 and 2024, and a few more this year. But according to people in the loop, the airline is talking to both manufacturers about holding up as many as 500 of those deliveries.
Most of those were due in 2027 and 2028. When an airline takes delivery of a jet, they have to come up with 80% of the price right then and there, even if the rest is paid over time. Putting off the handover of these planes means you can put off the big cash outlay and give your funding some room to breathe.
What triggered the rethink
The airline has had to deal with no end of trouble. There was the fatal crash in June, Pakistan barring Indian carriers from its airspace, and the war in Iran which meant more rerouting and pricier fuel. Add in a soft rupee when you have to pay in dollars for a lot of your expenses, and the strain is only magnified.
If you ask the people who handle the finances, the airline is looking at a $3 billion loss a year. Since 2022, that tab has run to over 550 billion rupees, or $5.8 billion. It’s been a sticking point for the board of the Tata Trusts, which has the reins on the holding company that owns most of Air India.
Financial guardrails, not a retreat
Since the 2022 takeover, the Tata Group has been telling management to be a bit more measured with their growth and to put some controls in place. We saw a hint of that earlier this year when they cut some flights in light of the situation in Iran and the closed airspaces.
An Air India rep would have it that any talk of this is pure speculation, and insists they are still on track to modernise and carry out their long-term plans. We tried to get a word from Tata and Airbus, to no avail. A Boeing spokesperson wouldn’t be drawn on it.
What travellers and partners should expect
The network is being looked at with an eye on what makes sense from a profit standpoint. Some routes will be let go and a few launches, be they domestic or otherwise, will have to wait while the airline puts stability first.
From what we’re hearing, here is what you can put in the cards for the time being:
– Aircraft deliveries to be put on the back burner
– Not as many new routes as was put forward
– Some routes to be axed to stop the bleeding
– A few airport launches put off
Why this matters for India’s aviation market
Between the mainline and the low-cost Air India Express, the flag carrier has been in the red for over ten years, despite the fact that everyone is flying. This is a sign that they are going to be more careful with where the money goes, given the headwinds of fuel costs and currency issues.
In the wider market, a less hasty ramp-up from Air India might take some of the edge off the capacity race, though it could mean a little less of a fight on some of the routes for now. It’s a simple equation: save your powder for later, and make sure you’re on solid ground before you start to grow again.
What comes next
The conversations with the planemakers are far from over and any changes will be down to how those are settled. For the moment, the goal is to put a dent in the losses and have some wiggle room before the 2027-28 deluge of new hardware.
There is a lot riding on this. If they can make the reset stick, Air India can get back to expanding from a better position. If they can’t, you can expect some sterner measures. For the time being, the word from the top is one of discipline, even as they reiterate they are here for the long haul.
