The new CEO of Air India Ltd., Tevolde Gebremariam, is exploring the possibility of integrating the low-cost subsidiary Air India Express into the main group to reduce costs and optimize operations amid significant losses.
According to sources, during numerous meetings with heads of various departments, Tevolde questioned the necessity of operating two airlines that possess separate operating licenses. The appointed director believes that having a unified aviation group would allow for reduced regulatory requirements and lessen the need for two separate groups of managers, engineers, and administrative staff.
The idea of merging Air India and its budget carrier is in its early stages and requires approval from the board of directors. It was noted that the Air India Express brand will retain its name after the merger.
A representative of Air India did not respond to an email requesting comment. These discussions demonstrate Tevolde's drive to eliminate inefficiencies after Air India recorded a loss of 22,000 crore rupees ($2.3 billion) for the year ending in March. Reducing losses is also critical for the carrier, as its parent company, Tata Sons Pvt., faces a battle for Tata leadership and regulatory pressure for listing.
Furthermore, Tevolde must address several issues, including the closure of Pakistani airspace to Indian carriers and the Middle East conflict, which disrupted passenger travel and increased fuel costs. Air India is also under scrutiny after a pilot on a flight involved in a sudden altitude drop tested positive for prohibited drugs.
Air India is not new to mergers; it previously merged with Indian Airlines in 2007. Following the acquisition of the airline by the Tata Group in 2022, further changes were made to the portfolio, when four brands were consolidated into two, forming the current structure of Air India and Air India Express.
In previous meetings, the appointed director expressed concerns about the low utilization of Air India's cargo capacity, a sector that supported the business at Ethiopian Airlines. He also strongly recommended that employees develop a plan to minimize technical malfunctions. Although Tevolde officially joined the company this month, he still requires approval from local regulators as CEO since he is a foreign national.
The new management, intended to streamline Air India's operations, is expected to be positively received by both the Tata Group and its shareholder, Singapore Airlines Ltd., which is facing political pressure due to support for Air India's losses.