Air India May Downsize Operations As Tata Group Seeks To Reduce Losses; Fleet Expansion and Route Growth Under Review

Air India is reportedly preparing to scale back its ambitious expansion plans after mounting financial losses prompted intervention from its majority stakeholder, the Tata Group. The move marks a significant shift in strategy for the airline, which has been pursuing one of the aviation industry's most aggressive turnaround and growth programmes since returning to Tata ownership.

According to reports, Air India recorded losses exceeding INR 26,000 crore during the financial year 2025-26, leading Tata Group to push the airline's management to focus on reducing losses and preserving capital rather than pursuing rapid expansion. Air India Flights Accident: Probe Initiated After 3 Aircraft Damaged at Delhi Airport During Storm (Watch Video).

Sources familiar with the matter told Bloomberg that Air India is now considering a more cautious approach centred on operational consolidation, cost control and delayed investments. One of the key measures under consideration is slowing aircraft deliveries from Airbus and Boeing. The airline had previously placed orders for nearly 500 aircraft in what was widely regarded as one of the largest deals in global aviation history.

Apart from fleet-related adjustments, Air India is also expected to reassess its route network. The airline may reduce its presence on less-profitable routes and focus on sectors that generate stronger returns. Reports indicate that the carrier has already implemented schedule reductions, including a temporary cut of around 27 per cent in international capacity and up to 22 per cent in domestic operations. Air India and IndiGo to Cut Domestic Flights From June 1 Amid Rising ATF Jet Fuel Prices, Low Summer Demand.

The airline is also believed to be reconsidering plans to launch new domestic and long-haul international hubs that were part of its broader expansion roadmap.

Despite the reports, Air India has not officially confirmed any downsizing plans. The airline reportedly described claims regarding a major contraction strategy as "highly speculative" and reiterated its commitment to modernisation and long-term transformation.

The developments come at a crucial stage for Air India as it seeks to balance financial sustainability with its goal of becoming a globally competitive full-service carrier. Industry observers will be closely watching whether the airline prioritises profitability over rapid expansion in the coming months.

If implemented, the proposed measures could reshape Air India's growth trajectory and influence the future of India's aviation sector.

(The above story first appeared on LatestLY on Jun 13, 2026 11:41 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).