Air India plans salary cuts amid losses, West Asia:Company may reduce flights by 20%, restrict employee leaves

Tata Group-owned Air India is preparing a major cost-cutting exercise as rising fuel prices and mounting operational expenses continue to pressure the airline’s finances. According to media reports, the airline may reduce salaries of Vice President-level officers, cut employee bonuses, and send non-technical staff on leave. The airline is also considering reducing flight operations by nearly 20% over the next three months due to the ongoing conflict in the Middle East, particularly tensions involving Iran. Air India currently operates around 900 flights daily. Salary cuts and leave plans under discussion Sources said these proposals were discussed during a board meeting held on Thursday. The airline is reportedly evaluating multiple measures to reduce costs as it struggles with rising fuel expenses and continued financial losses. An official announcement regarding these changes is expected soon. Air India is currently India’s second-largest airline and is also searching for a new CEO following Campbell Wilson’s resignation in April. Losses triple in three years Air India’s financial losses have risen sharply over the past three years: FY2023–24: ₹6,427 crore loss FY2024–25: ₹11,381 crore loss FY2025–26: Losses crossed ₹22,000 crore Source: Air India annual financial report Three major reasons behind rising losses 1. Middle East Conflict Increasing Fuel Costs Due to tensions between Iran and Israel, Air India has been forced to take longer routes to Europe and North America. Flight durations have reportedly increased by 1.5 to 2 hours, significantly raising fuel consumption and operational costs. 2. Heavy Investment in Modernisation Tata Group has invested heavily in ordering new aircraft and refurbishing older cabins as part of Air India’s transformation plan. These investments are currently adding pressure to the airline’s balance sheet. 3. High Operational Expenses The airline continues to operate several aging Boeing aircraft, leading to higher maintenance and spare-part costs. Additional expenses linked to the merger process with Singapore Airlines have further strained finances. Flight capacity may be reduced for 90 days According to sources, Air India’s board has proposed reducing flight capacity by over 20% for the next 90 days. The temporary reduction is expected to remain in place until the geopolitical situation in the Middle East stabilises. Crude oil and atf prices surge The ongoing conflict involving Iran has triggered a sharp rise in crude oil prices, which have reportedly increased by 45.5% since February 28. Although the government capped domestic Aviation Turbine Fuel (ATF) price hikes at 25%, international fuel costs have risen significantly. ATF prices saw dramatic fluctuations over the past few months: December 2025: ₹99,677 per kiloliter 1 January 2026: ₹92,323 (down 7.3%) 1 February 2026: ₹91,423 (down 1%) 1 March 2026: ₹96,638 (up 5.7%) 1 April 2026: ₹2,07,341 (up 114.5%) Fuel share in operating costs rises to 60% According to industry body FIA, fuel expenses now account for nearly 60% of airlines’ operational costs, compared to around 40% earlier. The sharp difference between domestic and international fuel pricing has further destabilised airline finances. Leadership vacuum adds to challenges Air India is facing these challenges without a permanent chief executive. The Tata Group has been searching for new leadership since Campbell Wilson stepped down earlier this year. Industry observers say geopolitical tensions, rising fuel prices, and the burden of maintaining older aircraft have created one of the toughest financial periods for the airline in recent years.