Air India Weighs AI Express Merger

Air India’s incoming CEO Tewolde Gebremariam is considering merging low-cost carrier Air India Express with the main airline as part of an effort to reduce operating costs and address mounting losses, according to a Bloomberg report cited by Business Today.

During departmental briefings, Gebremariam questioned the rationale for operating Air India and Air India Express as two separate airline entities with different operating licences. A combined structure could reduce regulatory requirements and eliminate duplication across administrative, engineering and management functions.

The discussions are still at an early stage, and any decision to combine the operations would require approval from Air India’s supervisory board. If the merger goes ahead, Air India Express is expected to retain its brand identity within the unified structure.

The cost-cutting review follows a difficult financial year for Air India. The airline reported a consolidated loss of around ₹22,000 crore ($2.3 billion) for the year ended March, according to the report.

Gebremariam is also facing external challenges, including the continued closure of Pakistani airspace to Indian carriers and disruptions linked to conflicts in the Middle East, which have increased fuel costs and affected international flight routes.

The incoming CEO has also raised concerns about Air India’s freight load factors and asked engineering teams to prepare plans to address fleet maintenance issues, according to the Bloomberg report. His formal appointment remains subject to final regulatory clearance.

The potential consolidation would represent another structural change for the Tata Group-owned airline. Air India and Air India Express were among the four aviation brands consolidated into the current two-brand structure following Tata Group’s acquisition of Air India in 2022.