Just months ago, Air India was talking about growth. The airline was inducting new aircraft, expanding its international footprint, integrating Vistara into a single full-service carrier and working through one of the largest transformation programmes ever undertaken by an Indian airline.
Now, a new report from Bloomberg suggests the carrier may be preparing to move in the opposite direction.
Air India Planning Cuts and Scaling Back Expansion
According to Bloomberg, Air India is evaluating downsizing measures after reporting significantly larger-than-expected losses for FY2025-26. The report suggests that the Tata Group, which has already invested heavily in rebuilding the airline since acquiring it from the Government of India in 2022, is becoming increasingly cautious about funding a turnaround that continues to face mounting operational and financial headwinds.
While Air India has already trimmed parts of its international network this summer, any additional cuts would signal a shift in focus from expansion to consolidation as management seeks to improve operational reliability and stem losses amid a challenging operating environment. There are also discussions about cutting back on meals on board.
Bloomberg reports that Air India is considering downsizing parts of its operation after posting a much larger-than-expected loss for FY2025-26. The report states that Tata Group executives are becoming increasingly cautious about committing additional capital to the airline’s transformation programme after losses exceeded internal expectations.
A difficult year for Air India
Air India’s troubles have been building for months.
The airline has been dealing with multiple external shocks simultaneously. Pakistani airspace restrictions have forced longer routings on many services to Europe and North America, increasing fuel burn and crew costs. The conflict in the Middle East has further complicated operations and pushed fuel prices higher. Air India has also faced ongoing aircraft delivery delays and supply chain constraints, affecting fleet availability. Air India Express not starting up flights from Noida International Airport next week is also an attempt to preserve cash.
According to earlier reporting, Air India reported a loss exceeding INR 22,000 crore for FY2025-26, significantly worse than expected, prompting the carrier to seek additional financial support from its shareholders, Tata Sons and Singapore Airlines.
The airline has additionally been operating under intense scrutiny following the AI171 tragedy and the ongoing investigation into the crash, while simultaneously continuing its ambitious fleet renewal and cabin retrofit programmes.
What could be cut next?
Bloomberg’s report does not specify which routes or divisions may be affected by future downsizing plans. However, Air India’s recent actions provide some clues.
In May 2026, the airline announced a broad rationalisation of its international network through August, reducing services on multiple long-haul routes to improve operational stability and protect profitability. Air India said the measures were intended to reduce disruption and improve reliability. The airline also scaled down the network after the crash as it evaluated operational stability.
Now, the airline is considering slowing down, which could include postponing some aircraft inductions (meaning delivery payments could be delayed). The Airline is just up for picking up new A320/321neos in the coming year or so, as per what I understood from meeting CEO Wilson earlier this year. This was how the airline’s narrowbody delivery pipeline was supposed to be.
The airline has already acknowledged that geopolitical disruptions and elevated fuel costs have materially altered the economics of several international routes. (Air India)
A balancing act between growth and financial discipline
The reported shift in approach highlights a growing tension within Air India’s transformation strategy.
Since returning to Tata ownership in 2022, the airline has embarked on one of the most ambitious aviation turnaround plans in recent history. The carrier has ordered hundreds of aircraft from Airbus and Boeing, launched a comprehensive brand refresh, integrated Vistara, and begun a multi-million-dollar cabin refurbishment programme.
However, aviation remains a capital-intensive business, and Air India’s losses have continued to accumulate even as passenger demand remains robust. The combination of high fuel prices, operational disruptions and delayed aircraft deliveries has made the path to profitability far more challenging than originally anticipated.
Bottomline
According to Bloomberg, Air India is evaluating further downsizing measures as mounting losses test the Tata Group’s patience with the carrier’s expensive turnaround effort. While no specific steps have yet been announced, the airline’s recent international schedule reductions suggest management is increasingly focused on protecting cash, improving reliability and steering the carrier toward a more sustainable path.
What do you think about what is happening at Air India these days? One Step Forward, One Step Backward?
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