Air India’s incoming CEO Tewolde Gebremariam is considering folding budget carrier Air India Express into the parent airline group as part of efforts to reduce costs and streamline operations, Bloomberg reported, citing people familiar with the matter.
The proposal, which is still at an early stage, could eliminate the need to operate two airlines with separate operating permits, according to the report. Gebremariam has questioned the rationale for maintaining separate management, engineering and administrative teams across the two carriers.
A combination could lower regulatory requirements and reduce duplication across the group, the people said. However, any merger would require approval from Air India’s supervisory board.
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Air India Express would continue operating under its existing brand if the two airlines are combined, according to Bloomberg.
The proposed restructuring comes as Air India grapples with significant financial and operational challenges. The airline reported a loss of around Rs 22,000 crore for the year ended March, according to the report.
Gebremariam, who officially joined Air India this month, was appointed to lead the carrier after building a reputation for transforming Ethiopian Airlines into one of Africa’s largest and most profitable airline groups.
According to Bloomberg, the new CEO faces several headwinds, including the closure of Pakistani airspace to Indian carriers and disruptions caused by the conflict in the Middle East, which have affected travel and pushed up fuel costs.
Air India is also dealing with a regulatory probe after a pilot from a flight involved in a sudden altitude drop tested positive for illegal drugs, Bloomberg reported.
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Gebremariam has also raised concerns about Air India’s low cargo utilisation and asked employees to work on reducing maintenance-related issues, according to the report.
The airline is no stranger to consolidation. Air India merged with Indian Airlines in 2007, while the Tata Group undertook further consolidation after acquiring Air India in 2022. Four airline brands were eventually consolidated into the current Air India and Air India Express structure.
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