Commentary: Walking away from Air India could cost SIA more

Air India's mounting losses and challenges raise concerns about whether Singapore Airlines (SIA) should continue its investment. CEO Goh Choon Phong acknowledged the difficulties during a results briefing in November 2025. In the fiscal year ending March, Air India posted losses of US$2.33 billion, more than double the previous year, and is seeking US$1.5 billion in fresh equity from owners Tata and SIA.

This could amount to nearly US$380 million based on SIA's 25.1% stake in the merged Air India-Vistara entity. Tata holds the largest share at 74.9%. As losses escalate, there is growing pressure on SIA to abandon the investment, but this may not be the best course of action.

Air India's ongoing challenges include the prolonged closure of Pakistan airspace to Indian carriers, depreciation of the Indian rupee against the US dollar, loss of key markets due to the Middle East conflict, high fuel prices, and a resistant corporate culture. The tragic Air India AI171 crash in June 2025 further compounded the situation. Tata Group Chairman N Chandrasekaran announced his planned departure in February 2027, amid disagreements over Air India's losses.

Despite these obstacles, SIA sees value in its partnership with Air India. India is the world's third-largest aviation market by passenger traffic and is expected to triple by 2044. The airline industry is crucial for India's growth, given low air-travel penetration and inadequate road and rail infrastructure. As the national carrier, Air India holds significant international traffic rights, airport slots, and enjoys strong brand recognition at home.

SIA's involvement provides expertise, operational discipline, and customer service, resulting in world-class standards.

Remaining in the partnership could yield substantial returns if Air India succeeds, while also expanding SIA's global reach. However, the path forward will be challenging, requiring a multi-year restructuring and significant investment. SIA must assess whether the long-term strategic opportunity justifies the costs and challenges.

The firm should articulate its assessment of the value of the Air India partnership, set milestones to judge its effectiveness, and define its operational control and the Indian government's tolerance. Staying the course involves more than just injecting additional funds; SIA must ensure the partnership aligns with its goals and generates satisfactory returns for shareholders.