Air India Tightens Spending Amid Rising Losses, High Jet Fuel Costs

Air India CEO Tewolde Gebremariam gears up for cost-cutting measures across the group as the Tata Group-owned aviation business grapples with mounting losses and rising operating costs amid airspace closures and persistently high jet fuel costs.

In an internal communication to employees on Monday, CEO Gebremariam said the airline needed to embed cost consciousness, frugality and accountability into its organisational culture amid an exceptionally challenging operating environment.

Air India and Air India Express are likely to merge several departments and set up a full-time, cross-functional team under the 'One Air India' integration plan.

The newly established cost-saving team will systematically review expenditure across functions and identify opportunities to improve cost efficiencies. Gebremariam urged employees to extend their full support and cooperation to the team.

"Cost savings cannot be driven by a single team or function alone; it requires the active participation and commitment of every employee," he said.

The airline has also revised its Schedule of Delegation (SOD) approval matrix, with all approvals to be routed through the Head of Department (HOD), Chief Executive Officer (CXO) and CEO, effective October 1.

Airspace closures, Middle East conflict add to pressure

Flagging the challenges facing the aviation sector, Gebremariam cited ongoing airspace closures, the conflict in the Middle East and the resulting operational disruptions, alongside persistently high jet fuel costs.

He said these factors were placing significant pressure on airlines across the industry and underlined the need for closer coordination and collective action within the Air India Group.

Air India launches PRABHAV employee award

As part of its cost-reduction drive, Air India has launched 'PRABHAV-The Value Creator Award', an initiative inviting employees to suggest ways to reduce costs, improve efficiency and maximise revenue.

The award will recognise ideas involving smarter ways of working, better resource utilisation, process improvements, contract optimisation or renegotiation, bringing outsourced activities in-house, efficient procurement and waste reduction.

Employees can also submit ideas aimed at generating new revenue opportunities or extracting greater value from the airline's existing products, services and capabilities.

Submissions will undergo a structured review process, and ideas that can be successfully implemented will be recognised and rewarded under the PRABHAV framework. Details of the submission process will be communicated separately.

Gebremariam said even small improvements could have a significant cumulative impact across a large organisation, adding that some of the best ideas often come from employees closest to the work.

"Every rupee we save creates an opportunity to reinvest in areas that matter most, whether it is enhancing our operations, improving our products and customer experience, or strengthening the foundations for our future growth," he said.