Air India is entering another important phase of its transformation, but the road ahead is far from easy. The airline is dealing with financial losses, operational pressure, safety concerns and a difficult global aviation environment, making cost control a major priority for its leadership.
At an employee town hall on September 7, Air India Chairman N Chandrasekaran called for a stronger culture of cost consciousness across the organisation. He stressed that controlling expenses cannot remain the responsibility of only senior management. According to him, every employee can contribute to improving efficiency and helping the airline build a more financially sustainable operation.
The message comes at a significant moment for the airline. Air India is also seeing a change at the top, with Tewolde Gebremariam taking over as the new CEO and MD from Campbell Wilson. The leadership transition comes while the carrier is attempting to strengthen its operations, rebuild customer confidence and manage the financial impact of several difficult events.
Air India’s Cost Pressure Grows
The need for tighter spending is closely connected with the airline’s latest financial performance. Air India’s annual loss more than doubled during FY26, reaching around Rs 22,238 crore compared with nearly Rs 10,859 crore in FY25, according to Tata Sons’ annual accounts.
Such a sharp increase highlights the financial challenge facing the carrier. Airlines operate with several major expenses, including aircraft leasing or ownership costs, aviation fuel, maintenance, employee costs, airport charges and technology investments.
For a full-service airline undergoing fleet expansion and operational restructuring, maintaining financial discipline becomes even more complicated. Air India therefore needs to find ways to reduce unnecessary spending without damaging the quality of service or compromising safety standards.
This is why the chairman’s call for Air India cost cutting is more significant than a routine instruction to reduce expenses. The wider objective appears to be building a mindset where employees consider efficiency while making everyday operational decisions.
Four Priorities For The Next Phase
Chandrasekaran outlined four broad areas that Air India needs to concentrate on: safety, customer trust, operational execution and cost discipline.
Safety remains the most important of these priorities. The chairman emphasised that safety cannot simply be discussed in meetings or included in company statements. It needs to become part of everyday working practices through strong processes, strict compliance and individual accountability.
Customer trust is another major concern. An airline’s reputation can change quickly when passengers experience cancellations, delays, poor communication or safety-related incidents. Rebuilding confidence therefore requires consistent performance rather than occasional improvements.
Operational execution is equally important. A large airline needs thousands of processes to work together, from flight planning and crew scheduling to aircraft maintenance, baggage handling and passenger services.
Cost discipline connects all of these areas. The challenge for Air India will be reducing avoidable costs while still investing where investment is necessary.
Why The Last 18 Months Were Difficult
The airline’s current financial pressure has not developed because of one single factor. Chandrasekaran acknowledged that the past 18 months had been particularly challenging for the carrier.
Geopolitical disruptions, airspace closures and changes in fuel prices created additional pressure on airline operations. These factors can quickly affect flight routes, operating costs, schedules and passenger demand.
Air India has also had to deal with the consequences of the tragic AI171 accident in Ahmedabad in June 2025. The London Gatwick-bound flight crashed shortly after take-off on June 12, 2025, killing 260 people, including passengers, crew members and people on the ground.
The incident has continued to remain an important part of the airline’s safety and reputation challenge. For Air India, improving safety standards and restoring passenger confidence are therefore closely connected objectives.
Safety Remains Under Spotlight
More recently, Air India faced another safety-related incident involving flight AI2379 on August 4, 2026.
The Phuket-Delhi flight suddenly lost around 300 feet in altitude, and 24 passengers and crew members were injured. The pilot operating the flight subsequently tested positive for a psychoactive substance, after which Air India terminated the pilot’s services.
Events such as these put additional attention on crew standards, operational procedures and compliance systems.
That makes Chandrasekaran’s focus on safety particularly important. The airline cannot treat cost efficiency as an objective that operates separately from safety. Cutting unnecessary expenditure may improve financial performance, but essential spending on training, maintenance, compliance and safety systems cannot be compromised.
The long-term goal will therefore be to make operations more efficient while protecting the areas that directly affect passenger safety.
Leadership Change Comes At Critical Time
The arrival of Tewolde Gebremariam adds another major element to Air India’s next phase.
Gebremariam has taken over as CEO and MD from Campbell Wilson, who played a central role in the airline’s transformation after the Tata Group’s takeover. Chandrasekaran thanked Wilson for guiding the airline through what he described as one of the most important periods in its history.
The leadership change gives the airline an opportunity to reassess its priorities and improve execution.
The new management will have to deal with several issues at the same time. It must improve reliability, strengthen safety systems, manage expenses and improve the passenger experience while continuing the broader transformation of the carrier.
That is a demanding combination, particularly when the airline is already carrying significant financial losses.
Cost Discipline Does Not Mean Cutting Everything
There is an important difference between cost consciousness and simply reducing expenditure.
For an airline, aggressive cost cutting can sometimes create new problems. Reducing spending on maintenance, employee training, technology or operational support could potentially affect service quality and reliability.
The stronger approach is to identify inefficient spending and remove waste while protecting critical operations.
For example, better aircraft utilisation can help an airline generate more revenue from its fleet. Improved scheduling can reduce operational inefficiencies. Better procurement practices can lower costs without affecting service quality. Technology can also help airlines manage resources more effectively.
This is likely the broader meaning behind the call for employees to participate in cost efficiency. Small improvements across thousands of daily decisions can eventually create a meaningful financial impact.
Customer Trust Is Equally Important
Air India’s financial recovery cannot depend only on lower expenses. The airline also needs passengers to trust the brand again.
Chandrasekaran highlighted the unique position Air India holds in India, noting that it is a company that attracts enormous public attention. People regularly discuss, criticise and appreciate the airline, but that attention also reflects the strong emotional connection many Indians have with the national carrier.
That creates both an opportunity and a responsibility.
If Air India can improve punctuality, consistency, safety and customer service, positive passenger sentiment could strengthen over time. But if operational problems continue, financial investments alone may not be enough to change public perception.
The airline therefore needs to make customer experience part of its financial strategy rather than treating it as a separate issue.
What Air India Needs Going Forward
The next stage of Air India’s transformation will require balance. The carrier needs financial discipline, but it also needs long-term investment.
The immediate priority is likely to improve operational reliability and reduce avoidable costs. At the same time, management must strengthen safety processes, employee accountability and customer-facing services.
The leadership transition could help create a renewed focus on these areas. But results will depend on execution rather than announcements.
Air India has already undergone major changes since returning to Tata Group ownership. The integration and transformation process has required substantial investment and organisational restructuring. The current phase is different because the airline must demonstrate that this transformation can also lead to stronger financial performance.
That will not happen overnight.
Conclusion
Air India’s latest push for cost consciousness reflects the difficult financial and operational environment facing the airline. With its FY26 loss rising sharply and safety and reliability remaining important concerns, the carrier needs stronger discipline across every level of its organisation. N Chandrasekaran’s message makes clear that the next phase is not only about reducing expenses, but about improving how the airline operates every day. Safety, customer trust, operational execution and financial efficiency will all need to move together. With Tewolde Gebremariam now taking charge, the coming months could prove important for determining whether Air India can turn its transformation into a more stable and sustainable business. For passengers and the aviation industry, the airline’s progress will be worth watching closely.
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