Air India Express may fold into Air India

Air India Ltd.'s incoming CEO Tewolde Gebremariam is contemplating merging the budget airline Air India Express into the main group, Air India, in an effort to reduce expenses amid record losses, according to sources familiar with the situation. During various departmental discussions, Tewolde questioned managers on the necessity of operating two separate airlines with distinct operating permits, stating that a single airline group would lower regulatory requirements and the need for duplicate managerial, engineering, and administrative staff.

The merger idea is still in its preliminary stages and would require approval from the supervisory board. Air India Express would retain its brand name if the merger were to happen. Air India's spokesperson did not respond to inquiries regarding the matter. These talks reveal Tewolde's determination to eliminate inefficiencies following Air India's Rs 22,000 crore ($2.3 billion) loss in the fiscal year ending March.

Lowering losses is crucial for the carrier as its parent company, Tata Sons Pvt., navigates a power struggle over the appointment of the Tata chairman and a regulatory mandate to list the company. Tewolde, chosen for his experience in turning Ethiopian Airlines into Africa's largest and most profitable carrier, faces numerous challenges, including the closure of Pakistani airspace to Indian carriers and the impact of the Middle East conflict on travel and fuel prices.

Air India is also under investigation for a pilot's positive drug test after a sudden altitude drop. Air India is not unfamiliar with mergers, having previously combined with Indian Airlines in 2007 and undergone further portfolio changes after Tata Group acquired the airline in 2022, unifying four brands into two.