I wish I could say I’m surprised by this development, but it seems like this was bound to happen, and some really bad luck along the way didn’t help either…
In this post:
Tata Group focuses on curbing Air India’s record losses
In late 2021, Air India was privatized by Tata Group, which was Air India’s initial owner when the company was first founded. Since then, executives at the company have been working hard to transform the airline. The issue is that this has been no small task.
As I said from the beginning, it would almost be easier to start an airline from scratch than to fix Air India, given the extent to which the airline was broken, particularly when it comes to passenger experience.
To Air India’s credit, the airline has been trying to turn things around, and the announcements have been impressive. Air India placed one of the largest aircraft orders ever, committed to reinventing the passenger experience, and genuinely wanted to grow, taking back market share that has gone to Gulf carriers over the years.
However, well over four years after being privatized, Air India doesn’t actually have that much to show for this transformation. This past financial year, the airline reported a record $2.8 billion loss. As I see it, this comes down to several factors.
For one, while Air India has started to improve its passenger experience, with new cabins and new lounges, the reality is that most long haul passengers are still experiencing the carrier’s old product. For that matter, the airline has also had some bad luck, from the crash of flight AI171, to Pakistani airspace issues, to increasing jet fuel costs, all of which have posed a challenge for profitability.
That brings us to the latest development. Bloomberg is reporting that Tata Group is tired of funding the losses at Air India, and has instructed management at the airline to focus on reducing losses rather than growing. This reportedly primarily revolves around deferring new aircraft deliveries, with around 500 more planes on order, and scaling back both domestic and international expansion plans. It also involves focusing on stabilizing operations, and even cutting costs.
Let me of course emphasize that this is according to people familiar with the matter, but no official announcement has been made yet.

Was this inevitable, or did Air India management screw up?
I think this situation raises the question of whether Air India’s revitalization was bound to play out this way, or if management made serious strategic blunders. Keep in mind that Air India CEO Campbell Wilson is stepping down this year, though the claim is that this has been planned since 2024.
Personally, I’m of the mind that of course Air India was going to suffer massive losses for years, given that you can’t reinvent an airline overnight. You first need to greatly expand operations, and massively reinvent the passenger experience, before you get a return on your investment, especially for an airline that has historically had such a bad reputation.
Customers start considering an airline more regularly when they actually consistently offer a certain type of experience, rather than just being promised something on one flight, or years down the road. Like, I had a lovely flight in Air India’s A350 business class, but I also recognize that if I flew most Air India routes to or from the United States, it would be a different story. So I can’t say I’m surprised by this outcome, though admittedly Air India has also had bad luck, with everything from the Dreamliner crash, to the regional airspace situation.
Structurally, there are reasons that Air India failed when it was owned by the government. At the same time, those structural issues weren’t going to be solved overnight with privatization, and it seems like Tata Group almost regained control of Air India out of pride rather than because it was actually a great investment with a ton of upside. I mean, even under the best of circumstances, airlines aren’t exactly high margin businesses.
I’m curious to see how this all plays out. I don’t think there’s necessarily anything wrong with cutting back on growth, but I hope the airline prioritizes offering a consistently high quality passenger experience, and that cost cutting doesn’t come in the form of cutting back on soft product, cabin retrofits, etc.

Bottom line
Tata Group, Air India’s owners as of several years ago, aren’t happy with the carrier’s losses. Air India reported a record loss of around $2.8 billion the last financial year, which is much bigger than the company’s owners were expecting.
They now reportedly want Air India to focus on controlling losses, which could come in the form of curbing growth and cutting costs.
While I give management credit for the direction the company has been headed, it’s not surprising to me that the airline hasn’t been fully transformed overnight, given what a monumental task that is. When you undertake a project of this size, you’re going to incur some massive losses upfront, with the hope of long term success. It’ll be interesting to see how this all plays out.
What’s your take on Tata Group getting tired of Air India’s losses?
India is the world's largest democratic country. East Indians populate the majority of high-tech staff in Silicon Valley. Heck, Google and Microsoft CEOs are East Indians. Yet, I have no positive perception towards India solely based on its caste system. A couple of years ago, a congress woman introduced a bill that eliminated caste system practice in her district. She was crucified by the Indian community and stunned by the reaction. The bill got no...
India is the world's largest democratic country. East Indians populate the majority of high-tech staff in Silicon Valley. Heck, Google and Microsoft CEOs are East Indians. Yet, I have no positive perception towards India solely based on its caste system. A couple of years ago, a congress woman introduced a bill that eliminated caste system practice in her district. She was crucified by the Indian community and stunned by the reaction. The bill got no traction. I do not want to live in a culture in which people anchor at the financial echelon via birthright in the form of nepo babies, like the Bushes and the Trumps, while others with intelligence, skills and talent are languished at the bottom with no opportunity to advance. For years, I do not see India will advance itself further and higher than where it is today the same way that MBS' Neom illusion will be open for business, in its original plan, in my lifetime. I spent summer 1994 in Malaysia (KL and Penang), Singapore and Vietnam. The Singaporean host informed me that his government, the founding father Lee Kwan Yew, would never invest in any project without earning profits. Well, this year SQ announced it lost nearly $1B in its currency ($900M) in its investment of Air India. Two cultures contrast each other at extreme ends of the pendulum and cannot be mixed like oil and water. Human resources, especially leadership, determines the country's destiny. For any business and government entity to function efficiently and effectively, the culture of leadership and rank and file must change before all else. The below link clearly explains Indian's culture that pulls the country backward. A reader of the article on India and China posted an exceptional commentary on Indian culture and government bureaucracy.
In the grand theater of global geopolitics, India stands as a colossal paradox, a nation brimming with potential yet perpetually ensnared in the webs of external influence and internal disarray. Despite its aspirations to sovereignty and superpower status, India finds itself inexorably positioned as an ally, servant, or subject to more dominant forces. This predicament is not merely a quirk of history but a structural inevitability, rooted in systemic patronage, institutional decay, and a fragmented national ethos. To understand this, one must dissect the layers of dysfunction that undermine India's autonomy, from its military and legal apparatuses to its fractured polity and duplicitous foreign policy. At the heart of India's vulnerabilities lies a pervasive culture of patronage, where appointments and promotions in critical institutions are dictated not by merit but by caste affiliations, religious loyalties, or political connections. This malaise is starkly evident in the nation's armed forces: the Indian Air Force, Army, and Navy, once envisioned as bulwarks of national defense, have devolved into second-tier entities plagued by inefficiency and favoritism. The police force fares even worse, resembling less a guardian of public order than a cadre of well-armed enforcers, often complicit in extortion and brutality. The rule of law, ostensibly enshrined in India's democratic framework, exists more as an aberration than a norm, enforced sporadically and selectively, contingent upon the whims of those in power. Constitutional observance, too, is a matter of expedient interpretation, bending to the prevailing winds of political expediency rather than upholding universal principles. This internal rot extends to India's polity, which remains profoundly fractured along linguistic, regional, and ideological fault lines. Unlike cohesive nation-states that rally around shared objectives, India grapples with a conspicuous absence of unity of purpose. National goals are obscured by parochial interests, and the federation's centrifugal forces, exacerbated by disputes between the center and states, undermine any semblance of coherent governance. Compounding this is India's myopic obsession with China, a fixation that has proven both distracting and humiliating. In the early 21st century, as India preened over its burgeoning middle class, the largest in the world at the time, China methodically transformed itself into the globe's manufacturing powerhouse. Today, a quarter-century later, India scrambles to emulate that model, its ambitions thwarted by the very divisions that allowed China to surge ahead unencumbered. Foreign policy, ostensibly a domain of strategic acumen, reveals another layer of duplicity. India operates a bifurcated machinery: the official channel, spearheaded by the eloquent and assertive External Affairs Minister S. Jaishankar, projects a veneer of diplomatic sophistication. Yet, paralleling this is an unofficial apparatus dominated by sensationalist media figures such as Arnab Goswami and Palki Sharma. These television personalities, far from embodying journalistic integrity, peddle a brand of outrage journalism that is loud, brash, and bereft of nuance. Their broadcasts, marred by grammatical lapses, mispronunciations, and a cavalier disregard for news prioritization, routinely flout international norms by labeling adversaries with inflammatory epithets like "terrorist" states. This selective indignation conveniently sidesteps India's own domestic afflictions: rampant drug addiction, entrenched sexism and gender discrimination, dowry-related femicides, caste-based atrocities of the most grotesque variety, political corruption, police malfeasance, and virulent religious bigotry. In stark contrast, China's more regimented society, albeit authoritarian, prioritizes order and progress, unburdened by such pervasive chaos. Historical grievances further illuminate India's propensity for self-sabotage. The 1962 Sino-Indian War, often invoked as a symbol of Chinese aggression, was in fact precipitated by India's own provocations. By permitting U.S. forces to train Tibetan insurgents on Indian soil, New Delhi actively abetted harassment against Chinese interests in Tibet, inviting the retaliatory incursion it now laments. Decades later, echoes of this hubris resurfaced in the 2020 Galwan Valley clash, where General M.M. Naravane's forces attempted a surprise maneuver amid the COVID-19 pandemic, only to suffer a decisive defeat. Once again, blame was swiftly apportioned to China, absolving India of its tactical miscalculations. These episodes underscore a deeper truth: India's lack of unified language, laws, customs, and political priorities renders it ill-equipped for sustained confrontation or cooperation, unlike China's disciplined, if harsh, regime. The culmination of these frailties is evident in contemporary realpolitik. Under Prime Minister Narendra Modi, India now seeks rapprochement with China not from a position of strength, but desperation, clutching at Beijing's coattails to shield its Hindu nationalist government from mounting Western scrutiny over human rights and democratic backsliding. This pivot, born of vulnerability rather than vision, epitomizes India's enduring subordination. Until it confronts its internal fissures and forges a truly cohesive identity, India will remain ensnared in the orbit of others, forever the ally, servant, or subject in a world it aspires to lead. The path to genuine independence demands introspection, reform, and unity, qualities that, for now, remain elusive.
Woah. That was actually a good-read. Sincerely, thank you for taking the time to share your nuanced thoughts on all sorts of things here.
AI was going to be a beast to turnaround under normal circumstances but the current high fuel price environment is hurting a lot of Asian airlines (and economies) including in the Middle East particularly hard.
AI's turnaround was built on the idea that it could start to carry alot of the int'l passengers that have been connecting through the Middle East.
The ME airlines are deeply discounting in order to keep their operation...
AI was going to be a beast to turnaround under normal circumstances but the current high fuel price environment is hurting a lot of Asian airlines (and economies) including in the Middle East particularly hard.
AI's turnaround was built on the idea that it could start to carry alot of the int'l passengers that have been connecting through the Middle East.
The ME airlines are deeply discounting in order to keep their operation going in the midst of fear of transitting the Middle East so fares are low.
A settlement of the Iran war might provide more security for ME airlines but fuel prices will remain high for years in order to refill depleted reserves around the world.
Euro airlines are fairly well hedged through 2026 so there will continue to be a shift in Europe/US to India traffic to Euro airlines and from Indian and ME airlines while US airlines, to the extent they can serve India will also benefit from a stronger competitive position.
and, given Indigo's issue, this isn't just an AI issue. It is a huge step backwards for the growth and maturity of aviation in India which should make us all sad.
Wow, again. Tim, you got through that without mentioning Delta or United. I’m impressed. Looking forward to your next post on Seeking Alpha (if that’s the same Tim Dunn over there.)
So someone familiar with the Indian commercial aviation industry please comment: how in the world is there only one major international airline from India? If more Indians were regular customers of Indian airlines the ME3 would never have gotten even close to as big as they are.
(Also, leave it to Air India to not be able to capitalize on literal bombs falling on your competitors' airports)
Because the Tata group is no different from the government?
Honestly I don't think India has enough high yield originating passenger demand to justify more than one international airline. You have multiple domestic airlines obviously, but for international, a lot of the premium fares are coming from other countries rather than India itself. Yes, India has wealth and premium demand but I would imagine more of the airfare dollars are from outside India pax rather than India-based pax and those passengers outside India are going...
Honestly I don't think India has enough high yield originating passenger demand to justify more than one international airline. You have multiple domestic airlines obviously, but for international, a lot of the premium fares are coming from other countries rather than India itself. Yes, India has wealth and premium demand but I would imagine more of the airfare dollars are from outside India pax rather than India-based pax and those passengers outside India are going to preference Middle Eastern or their own country's airlines.
Also, it is not trivial to capitalize on an acute event like what's happening in the middle east. Other than putting out what would be perceived as questionable / opportunistic marketing, they can't accelerate the hard product transformation and other aspects of the airline that are necessary to truly capitalize on the temporary drop in demand for ME carriers.
While I personally wouldn't fly a Middle Eastern carrier to India at the moment, I still wouldn't fly Air India. I would rather fly United (my preferred airline) or any other US carrier or Air France than flying Air India even though they offer a nonstop from my city to Delhi.
I’ve heard their lounges smell of Indian food. Couldn’t explain why that would be the case though…
Well, Indian food is delicious, so I’d sure hope so. Not an Air India lounge, but the Encalm Prive lounge at DEL T3 has some of the best masala dosas I’ve ever had. Man, now you got me hungry…
It is catch 22. They need newer planes for fuel efficiency and newer interior if they want to charge higher fares. So they do need new planes delivered, at least a couple dozens, along with refurbishing older planes to new interior.
They can defer the narrow body fleet delivery as they have enough already. Except for the XLRs which can free up 787-8 to be used on longer routes.
They also need to have a proper refurbish or just repair program to fix planes daily with quick turnaround. Whether mechanical or the in cabin, the tech ops have been horrendous.
Not a great time to be an international Indian carrier, that's for certain. I imagine the same results would've transpired if TATA had started their own airline, and even with the Gulf carriers struggling, I think the airspace issues and fuel costs would prove too much for them
Tata had their own airline.
Getta loada these tatas…
Emirates has to be thrilled India can’t get its act together. How much less profit would EK have if air India was remotely competent?
I wouldn't fly AI over EK unless it's the only option.
And personally for where I would fly in India, EK has better itineraries anyway.
Air India’s losses are also seriously denting Singapore Airlines’ profitability. Terrible investment.