- Air India considers staff furloughs, bonus cuts due to rising costs.
- Airline may reduce flight capacity by over 20% if conditions worsen.
- Pakistani airspace closure significantly increases flight times and fuel expenses.
Air India’s ambitious transformation journey is facing fresh turbulence.
The Tata Group-backed airline is now weighing a series of cost-cutting measures, including possible furloughs for non-technical staff, lower bonuses and a sharp reduction in flight capacity, as rising fuel prices and geopolitical tensions squeeze the aviation industry.
The developments mark one of the clearest signs yet of the financial pressure facing Indian airlines amid the ongoing conflict in West Asia.
Boardroom Discussions Turn to Cost Control
According to The Financial Express, Air India’s board met on Thursday to discuss multiple steps aimed at containing costs as operating pressures intensify.
Among the measures being considered are furloughs for non-technical employees, cuts in performance-linked bonuses, and salary reductions for senior executives at the vice-president level and above.
The airline is also considering reducing flight capacity by more than 20 per cent over the next three months if conditions fail to improve.
Airspace Closures Add to the Pressure
A major challenge for the airline has been the closure of Pakistani airspace, which has forced Air India to reroute flights headed to Europe and North America.
The longer flight paths have added hours to journeys and significantly increased fuel consumption at a time when Aviation Turbine Fuel (ATF) prices are already elevated.
The disruption to Dubai airspace has created additional operational pressure, increasing costs across hundreds of weekly departures.
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Mounting Losses and Fuel Costs
Air India has suffered speculative losses of around Rs 22,000 crore over the past year.
The situation has also impacted Singapore Airlines, which owns a little over 25 per cent stake in Air India.
CEO Absence Raises Questions
Another point that drew attention was the absence of Air India CEO Campbell Wilson from the board meeting where the airline’s financial and operational challenges were discussed.
According to reports, the meeting proceeded without the airline’s top executive, although no official explanation has been offered for his absence.
Air India has also not confirmed or denied the figures related to losses or the discussions held during the meeting.
A Tough Time for Global Aviation
The crisis facing Air India reflects broader challenges confronting airlines globally.
The ongoing West Asia conflict has disrupted air routes, pushed fuel prices higher and increased operational uncertainty across the aviation sector.
For Air India, these pressures come on top of existing operational challenges, including the aftermath of a fatal crash and earlier airspace disruptions linked to tensions with Pakistan.
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Leadership Changes Add to Uncertainty
The timing is particularly crucial for Air India, which is currently looking for a new chief executive officer after Campbell Wilson resigned in April.
Meanwhile, rival IndiGo appointed aviation industry veteran Willie Walsh as its CEO at the end of March as Indian airlines prepare for a difficult operating environment.
