Air India CEO Eyes Merging Budget Carrier to Reduce Costs

Tewolde Gebremariam, Air India's incoming chief executive, is considering folding Air India Express, the group's budget airline, into the main carrier to streamline operations and cut costs. In meetings across departments, Gebremariam has questioned managers about the necessity of operating two separate airlines, each with its own operating permit, management structure, and supporting functions. The proposal would consolidate regulatory requirements and eliminate duplication in management, engineering, and administrative roles while retaining the Air India Express brand.

The merger proposal remains at an early stage and would require approval from Air India's supervisory board before proceeding. Gebremariam, former chief of Ethiopian Airlines, was appointed to lead Air India against a backdrop of significant financial pressure. Air India reported a loss of approximately INR 22,000 crore (USD 2.3 billion) for the financial year ended March 2026, prompting the airline to pursue cost reductions and operational improvements.

This potential restructuring reflects Gebremariam's broader efficiency agenda at the airline. The Tata Group has undergone previous consolidations in its aviation portfolio: Vistara was merged into Air India in 2024, and AirAsia India was folded into Air India Express. Sales teams from both carriers were already unified under a global sales structure in 2025. Gebremariam has also raised questions regarding Air India's cargo utilisation and maintenance-related reliability issues, priorities informed by his experience at Ethiopian Airlines.

The proposal demonstrates Gebremariam's intent to address structural inefficiencies in Air India's operations. Industry experts note that a single operating entity could reduce regulatory compliance costs and simplify management oversight, though the operational and commercial implications of consolidation remain subject to board evaluation and final approval.