Air India's incoming CEO weighs folding budget arm into main carrier
Dhaka: Air India's incoming Chief Executive Officer Tewolde Gebremariam is reportedly considering merging the airline's low-cost arm, Air India Express, into the parent group as part of a broader cost-cutting push amid record losses.
According to people familiar with the matter who requested anonymity, Tewolde has questioned department managers in multiple internal meetings about the rationale for operating two separate airlines with distinct operating permits.
The CEO-designate reportedly believes a single airline group would ease regulatory burdens and cut down on the need for duplicate management, engineering, and administrative teams across both carriers.
The merger idea remains in early discussion stages and would require approval from Air India's supervisory board before moving forward. Air India Express is expected to retain its brand name even if the combination proceeds.
The talks reflect Tewolde's push to address inefficiencies after Air India posted a loss of INR 22,000 crore, equivalent to approximately USD 2.3 billion, for the year ending in March. Cutting losses has become especially urgent as parent company Tata Sons Pvt. Ltd. navigates a leadership dispute over its chairman's tenure and pressure to pursue a public listing.
The 61-year-old executive was selected largely on the strength of his record at Ethiopian Airlines, which he helped grow into one of Africa's largest and most profitable carriers.
Tewolde faces a range of challenges at Air India, including the continued closure of Pakistani airspace to Indian carriers, fallout from the Middle East conflict disrupting travel and raising fuel costs, and an ongoing probe after a pilot involved in a sudden altitude-drop incident tested positive for an illegal substance.
This would not be Air India's first major restructuring. The carrier merged with Indian Airlines in 2007 and underwent further adjustments after Tata Group's 2022 acquisition, when four brands were consolidated into the current two, Air India and Air India Express.
Tewolde has also raised concerns over the airline's underused cargo capacity, an area that drove strong results at Ethiopian Airlines, and has asked staff to develop plans addressing recurring maintenance issues. He officially joined Air India this month but still awaits regulatory approval as CEO, as he is a foreign national.
