The board of Air India has approved the integration of core administrative departments, including HR, finance, and IT, with its budget arm, Air India Express. This move aims to eliminate operational redundancies following a consolidated net loss of ₹22,238 crore in FY2026. The airline group now faces the task of executing this complex integration over the next six months while managing heavy competitive pressure in the Indian aviation market.
Air India has initiated a major restructuring of its operational framework to address financial sustainability. The board of the airline recently approved a plan to merge backend administrative functions—specifically human resources, finance, information technology, and engineering—between its full-service carrier, Air India, and its low-cost subsidiary, Air India Express. This structural consolidation is part of a broader, long-term strategy by the Tata Group to eliminate operational duplication and reduce overheads across its aviation portfolio.
The push for efficiency comes after a difficult fiscal year. In FY2026, the group reported a consolidated net loss of ₹22,238 crore, set against total revenue of approximately ₹71,870 crore. The individual performance of the entities highlights the financial pressure, with Air India reporting a standalone net loss of ₹15,368 crore, while its budget arm, Air India Express, recorded a deficit of ₹6,767 crore. Under the leadership of CEO Tewolde Gebremariam, the group is prioritizing internal synergy, aiming to ensure all entities function as a cohesive unit rather than as fragmented silos.
Despite the consolidation of backend systems, the airline is maintaining a clear distinction between its consumer-facing brands. Air India will continue to focus on its premium, full-service model, while Air India Express will retain its identity as a budget carrier. The marketing departments of these airlines have already been merged into a unified commercial division. The management expects the current phase of integration to be completed within six months.
For investors and market watchers, the focus will remain on the execution of this strategy. Airline integrations are notoriously complex, often involving risks such as potential service disruptions, technical glitches during IT system migration, and the challenge of aligning organizational cultures. Furthermore, the Indian aviation market remains highly competitive, with established players like IndiGo exerting significant pressure on margins through aggressive pricing and route expansion. Successful cost-cutting through this merger is essential for the Tata Group to stabilize its balance sheet and improve its competitive positioning.
The key monitorable for the next few quarters will be the speed and efficiency of this transition. Stakeholders will track whether the unified leadership can successfully lower the cost-to-revenue ratio and whether the integration leads to visible improvements in the group’s financial performance or if initial implementation costs temporarily impact the bottom line.