Air India’s board is meeting on October 15 to evaluate new cost-control measures, including stricter staff travel policies. This move follows a challenging fiscal year marked by high losses, prompting a focus on operational efficiency and back-end consolidation with Air India Express.
Air India is set to tighten its operational belt as it works to manage substantial financial deficits. The airline's board is scheduled to meet on October 15 to discuss a range of austerity measures, including a revision of employee travel policies. This move is part of a wider effort to control overheads and improve the company's financial health following a difficult fiscal year.
The focus on cost-cutting comes after a challenging FY26, where the consolidated entity reported a net loss of ₹22,238 crore. This financial pressure was worsened by several external factors, including high fuel prices, the impact of the fatal AI171 accident, and the financial toll of regional conflicts in West Asia, which have forced airlines to take longer routes and burn more fuel.
To address the mounting losses, the management is looking at several internal changes. Beyond stricter eligibility for official travel—which reinforces a policy requiring staff to fly economy class unless specific conditions are met—the airline is also cracking down on the misuse of staff travel benefits. Investigations have previously flagged widespread irregularities in the Employee Leisure Travel (ELT) policy involving thousands of employees. Such steps are seen as an attempt to enforce discipline within the organization during its long-term turnaround phase.
Simultaneously, the board will deliberate on the functional integration of Air India and its low-cost arm, Air India Express. Rather than a total merger, the strategy focuses on combining back-end functions like human resources and finance to remove duplicate roles and streamline decision-making. Despite these cost-saving measures, the group continues to expand its footprint; Air India Express is set to launch its largest winter schedule effective October 25, 2026, featuring 585 daily flights and over 40 new routes.
The airline’s path to profitability remains a complex 5-to-10-year process. While efficiency measures like back-end consolidation are intended to lower costs, the company remains vulnerable to unpredictable risks, including further geopolitical tensions, currency fluctuations, and potential liabilities related to past operational incidents. For the broader aviation sector, these developments serve as a case study on the difficulties of integrating large-scale airline operations while trying to maintain product differentiation between full-service and low-cost models.
Moving forward, industry observers will track whether these austerity measures translate into improved profit margins and smoother operations. The effectiveness of the departmental integration and the ability to maintain service quality while cutting costs will be the key factors determining the success of this turnaround strategy.