Air India To Downsize Operations After Tata Group Asks To Focus On Reducing Losses, Says Report
Air India is preparing to scale down operations after Tata Group reportedly directed the airline to curb losses exceeding ₹26,000 crore in FY 2025–26. The carrier is expected to defer aircraft deliveries, reduce routes and further cut international and domestic capacity. The move marks a sharp shift from its earlier aggressive expansion strategy post-privatisation.
Air India To Downsize Operations After Tata Group Asks To Focus On Reducing Losses, Says Report | File Pic
Mumbai: Air India is preparing to downsize its operations after its majority stakeholder Tata Group has asked the airline to reduce the mounting losses. The move is seen as a sobering pivot for Air India, which was undergoing one of the most ambitious expansion blueprints in modern aviation history after privatisation.
Staggering Financial Losses
According to people familiar with the matter, Tata Group has reportedly issued an unyielding mandate to airline leadership to halt aggressive growth and drastically narrow widening losses. The directive follows a grueling financial year 2025-2026 in which the airline’s losses have exceeded Rs 26,000 crore.
Faced with severe pushback from the board of Tata Trusts, Air India management is now said to be designing a defence-first strategy centered on capital preservation, fleet deferrals, and operational consolidation, according to Bloomberg. Under this strategy, the carrier is said to slow down its multi-billion-dollar turnaround plan and slow down deliveries for as many as 500 aircraft from Airbus and Boeing – the order which was hailed as the historic order in the aviation industry.
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Route Network Contraction
Alongside fleet delays, the airline is also expected to execute a deep structural contraction of its route network, walking back from less-profitable sectors to protect its remaining cash reserves. While the airline has already initiated sweeping schedule reductions, temporarily slashing its international flight capacity by approximately 27% and domestic capacity by up to 22%, the airline is now looking at further rationalisation.
According to reports, Air India might also shelve venturing into fresh domestic and long-haul international hubs, as per its previous expansion plans. Notably, Air India has not issued any formal statement about downsizing operations but it had labelled Bloomberg’s downsizing claims as "highly speculative" and reinforcing the carrier's baseline commitment to modernisation.
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