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Air India weighs folding Air India Express into group to cut costs

Our read

Air India is most likely to preserve the Air India Express brand while folding its back-office and support functions into the group, producing incremental—not immediate—cost relief.

For operators

Air India is exploring a back-end integration of Air India Express to remove duplicate functions and reduce costs while preserving the low-cost carrier’s consumer-facing brand.

Watch

Formal supervisory-board decision or appointment of an integration lead.

Ask next

The report,

Incoming Air India CEO Tewolde Gebremariam is considering folding budget carrier Air India Express into the group while retaining its brand, aiming to reduce duplicate regulatory, management, engineering and administrative costs after Air India’s Rs 22,000 crore annual loss.

Air India lost ₹22,000 crore in the year through March
Air India loss, year through March
₹22,000 crore ($2.3 billion)

Reported figures

From the report. Source details below

Air India acquired by Tata Group in 2022
Air India merged with Indian Airlines in 2007

Also in the report

  • Rs 22,000 crore ($2.3 billion) loss in the year through March
  • 61-year-old CEO-designate
  • four brands consolidated into two after Tata acquisition

Why it matters to operators

A retained-brand consolidation could create a leaner group structure and highlight further opportunities to centralize regulated, engineering, administrative and management capabilities.

What to watch next

  • Regulatory filings or approvals affecting Air India Express's operating structure, air operator certificate or shared-service arrangements.
  • Announced cost-savings target, headcount plan or timeline tied to the ₹22,000 crore annual loss.
  • Evidence of shared procurement, engineering, IT, sales distribution or airport-ground-handling contracts.
  • Route rationalization, fleet transfers or coordinated scheduling between Air India and Air India Express.
  • Labor resistance, attrition spikes, service disruptions or integration-related one-off charges.

Likely next moves

Our read of what comes next — analysis, not reported by the source.

  • Commission a group-wide duplicate-cost and headcount review across engineering, administration, finance, procurement and regulatory compliance.
  • Seek supervisory-board approval for a phased integration blueprint that preserves Air India Express's customer-facing brand and low-cost positioning.
  • Create shared procurement, maintenance-support and technology functions to capture early savings before any legal or operational restructuring.
  • Review overlapping domestic and regional international routes, fleet deployment and airport services for network-level efficiencies.
  • Engage regulators, employee groups and key airport/service vendors early to reduce approval and transition friction.

The counter-case

The case against this reading — not reported by the source.

The savings case may be overstated: Air India Express’s low-cost operating model, route network and labor arrangements could become less efficient if absorbed into a larger full-service group structure. Integration can trigger IT, fleet, labor, regulatory and brand-transition costs that outweigh near-term administrative savings, while reducing the separate airline’s ability to compete against IndiGo and other low-cost carriers. Retaining the brand may limit the very simplification needed to eliminate duplicated functions.

The source

Source Read the source at ET Small Business

Published

Also reported by Mint, Business Standard

First seen