Whalesbook
EASA Raises Safety Concerns Over Air India
The European Aviation Safety Agency (EASA) has begun new scrutiny of Air India after finding numerous safety lapses during surprise inspections of its aircraft at European airports. Data showed a concerning fault ratio of 1.96 for Air India planes in January. EASA alerted India's Directorate General of Civil Aviation (DGCA) about the findings. This regulatory action marks a key challenge for Air India's transformation under the Tata Group. A fault ratio above 2.0 could trigger more intense inspections and potentially restrict operations in important international markets. After the DGCA ordered corrective steps, the fault ratio improved to 1.76 recently, but this is still higher than the under-1.0 benchmark seen in airlines with strong safety records.
Aging Fleet and Refurbishment Delays Slow Progress
One senior airline official pointed to the carrier's aging aircraft as the reason for the higher number of faults. Air India's $400 million plan to refurbish its older planes, started after Tata acquired the airline, has faced significant delays. Global vendors are struggling to meet deadlines due to ongoing supply chain issues, pushing back fleet retrofits, especially for Boeing 787 and 777 aircraft, to late 2028. These delays hinder the airline's efforts to improve its product and services, affecting passenger experience and efficiency. Currently, 37% of Air India's fleet is over 10 years old, compared to only 7.6% for IndiGo. Many of Air India's older planes are between 15 and 20 years old, and sourcing spare parts, including for seats, has become difficult.
Engineering Lapses and DGCA Notices
The DGCA has repeatedly criticized Air India's engineering and maintenance. Following several serious issues, top engineering officials were suspended and CEO Campbell Wilson received a show cause notice. This was partly for operating eight scheduled flights with an Airbus aircraft that lacked a mandatory airworthiness permit. Data shown in the Indian parliament indicated that over 70% of aircraft in the Air India Group fleet experience recurring technical defects, the highest rate among airlines reviewed. This widespread problem, alongside a fatal Boeing 787 crash in June 2025, has intensified regulatory attention. The airline has also faced other regulatory actions, including fines for flying without valid airworthiness certificates.
Financial Losses and Integration Challenges
Air India's financial performance is a major concern. For the fiscal year ending March 31, 2025, Air India and Air India Express together reported a pre-tax loss of ₹9,568.4 crore, with Air India contributing ₹3,890.2 crore to that loss. Losses are expected to exceed ₹15,000 crore for the fiscal year ending March 31, 2026. Despite receiving ₹9,558 crore in capital from Tata Sons and Singapore Airlines in FY25, analysts estimate the airline will need substantial annual funding of ₹20,000-25,000 crore for fleet upgrades and operating costs. The integration of Vistara, though carried out smoothly, adds further complexity to the turnaround efforts. These efforts are also impacted by industry-wide issues with supply chains and engine reliability, affecting other carriers like IndiGo.
Path to Profitability Remains Long
Air India is strengthening its engineering team by bringing in expertise from Singapore Airlines. Jeremy Yew, previously from SIAEC, has been appointed as the new head of engineering, aiming to improve operational oversight and technical performance. However, the path to profitability is expected to be long, with sources suggesting it will take three to four years. The airline's Vihaan.AI transformation plan, launched in September 2022, faces challenges from ongoing global supply chain disruptions and higher operational costs. These issues require adjustments to achieve financial stability.