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NEW DELHI — When the Tata Group took back control of Air India (AI) in 2022, the whole country looked at it like a new start for the national airline.
There was a big hope that new planes, fresh management, and better service would finally push the airline back to profit. But the latest numbers show it’s still a long climb ahead.
For FY25, AI, together with its budget arm Air India Express (IX), reported a combined net loss of ₹9,568.4 crore (US$1.15 billion). It’s a reminder that even with Tata’s backing, turning around a legacy carrier is never easy.
Breaking Down the Numbers
Air India had the biggest hit, with losses of ₹3,890.2 crore (US$467 million). Air India Express, which is in the middle of absorbing AirAsia India, added another ₹5,678.2 crore (US$681 million) to the red.
On paper, the figure looks rough, but aviation experts say a lot of this is because of restructuring and merger-related spending. It’s money that Tata has to burn today if it wants a leaner, more efficient airline in the future.
Why the Losses Piled Up
There are a few reasons why the costs went high this year:
- Fuel costs: Jet fuel in India is among the most expensive in the world and eats up 30–40% of operating expenses, according to industry reports.
- Leasing and Maintenance: While IX’s income rose 33% year-on-year to ₹7,600 crore (US$910 million) in FY25, its total expenditure grew 38.3% to ₹7,763 crore (US$930 million), according to documents submitted to the Registrar of Companies and reviewed by Business Standard.
A significant part of these costs came from operating an older fleet and leased aircraft, which kept overall expenses high.
- Integration pain: The merger of AirAsia India into AI Express, along with preparations for Air India and Vistara to come together, necessitated significant investments in IT, crew training, branding, and legal work.
While this contributed to IX’s net loss of ₹163 crore (US$19 million) in FY24, the costs scaled up significantly in FY25 as the airline expanded operations, absorbed new routes, and handled merger-related restructuring, contributing to a combined loss of ₹5,678.2 crore (US$681 million).
- Tough competition: IndiGo (6E) has over 60% domestic market share, and Akasa Air (QP) is growing fast. The Tata-owned airline has limited room to increase fares, further squeezing profitability.
The Integration Journey
Tata aims to consolidate its four-airline portfolio into two: a full-service carrier (Air India + Vistara) and a low-cost carrier (AI Express + AirAsia India).
But like most airline mergers, it’s been slow and messy. Shifting IT systems, training staff to the same standards, and working through regulatory approvals are all taking longer and costing more. The Vistara (UK) merger, with Singapore Airlines (SQ) as a partner, is the next big step, and that comes with its own complexity.
Passengers Are Flying, Profits Still Not Coming
Demand for flights in India is robust. AI has launched more routes to the US and Europe, including New York (JFK) and San Francisco (SFO). Air India Express is expanding its presence in the Middle East, facilitating connections between Indian workers and their families in Gulf countries.
Planes are full, but profits aren’t showing up. Domestic fares remain low due to intense competition, while Gulf carriers like Emirates (EK) and Qatar Airways (QR) continue to attract premium passengers on the international side.
Fleet Renewal and The Big Order
One of Tata’s significant moves was placing a historic order for 470 new aircraft with Airbus and Boeing. The order includes A350s, 787 Dreamliners, and 737 MAX jets.
Building upon this, AI has expanded its fleet acquisition plans, placing firm orders for an additional 100 aircraft and reportedly negotiating for another 200 narrow-body jets, aiming for a modern fleet with better fuel efficiency and improved passenger experience.
But aircraft orders don’t show results overnight. Deliveries will come over the years, and until then, AI is leasing planes to meet demand. That short-term solution makes the balance sheet heavier.
What Analysts Say
According to an internal presentation reviewed by the Economic Times, AI had set a target to become profitable by FY27. However, closure of Pakistani airspace for Indian carriers is expected to delay this, experts say.
“It will still take a little bit more time to achieve what we want to achieve, but it was a five-year project in the beginning,” said Campbell Wilson, CEO of Air India, referring to the five-year transformation plan, Vihaan, announced in September 2022.
Analysts remain cautiously optimistic. They note that once integration settles and newer, more fuel-efficient jets replace older aircraft, profitability should improve. Tata’s deep pockets and long-term vision are seen as crucial to supporting the airline through this turnaround.
Bottom Line
Air India is more than just an airline for Tata. It’s the company J.R.D. Tata started back in 1932 and lost when it was nationalised. Taking it back was symbolic, but fixing it is the real test.
The loss shows there’s still a long way to go. But with substantial investment, a massive fleet plan, and Tata’s vision, the airline has at least got a clear direction. Whether it can stay on this course without more turbulence, that’s the question the next few years will answer.
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Featured image: Nuno Seletti/Airways
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