Air India rules out layoffs, defers raises amid global headwinds
Air India assured its 24,000-plus employees of job security while deferring annual salary increments by at least one quarter, as the Tata Group-backed carrier grapples with soaring jet fuel costs, airspace closures, and leadership uncertainty.
Air India has assured its more than 24,000 employees that layoffs are off the table, even as the Tata-backed carrier defers annual salary increments by at least one quarter and tightens spending. The airline has been buffeted by the closure of Pakistan airspace, disruptions due to the West Asia war, and surging jet fuel costs.
“We don’t anticipate layoffs,” said chief human resources officer (CHRO) Ravindra Kumar G.P., addressing the employees during a town hall on Friday, two people present there told Mint.
The country’s second-largest airline is battling a string of issues, including rising losses, geopolitical headwinds, macroeconomic factors such as the rupee's depreciation against the dollar, which are impacting costs, and a leadership transition.
The CHRO added that the airline will defer annual increments by at least one quarter in light of the uncertain economic environment and will proceed with variable pay for the last financial year. It will continue with planned promotions too.
Chief executive Campbell Wilson, also present at the town hall, reiterated the need to bring down costs. “We need to focus relentlessly on our costs in these tough times,” Wilson told employees. He urged employees to suspend discretionary spending, renegotiate rates where feasible, and defer non-critical expenditures.
The Tata Group-backed airline’s losses have reportedly exceeded the ₹10,000 crore reported in FY25. The privately held Air India is yet to announce its FY26 numbers.
The employee town hall was held a day after the Air India board met to discuss the finances for the fiscal year ended 2026. Nearly a month back, on 8 April, Tata Sons chairman Natarajan Chandrasekaran told Air India employees to focus on execution amid industry-wide challenges.
Air India did not respond to Mint's queries on the discussions in the townhall.
- Air India rules out layoffs but delays annual increments by one quarter.
- CEO Wilson has resigned; no successor has been named at a critical moment.
- International jet fuel doubled in April, squeezing already loss-making routes.
- International operations trimmed through July as rerouted flights turned unprofitable.
- Analysts say management sees current pain as temporary, not a structural breakdown.
Cutting expenditure
Chandrasekaran’s town hall came amidst reports of rising losses and a leadership transition at the airline. Outgoing chief executive Wilson had resigned on 30 March and is currently serving his notice period. There is still no word on his successor.
The reassurance to employees regarding job security is significant. Chairman Chandrasekaran had said: “We need to concentrate on what is within our control, sharpen our cost discipline, and stay realistic about the situation”. This had raised concerns about the possible cost-cutting measures that the airline would have taken.
Speaking on the airline's financial performance, chief financial officer Sanjay Sharma said that FY26 has seen a softening in revenue amid heightened external uncertainties. In contrast, FY25 saw strong revenue growth and fleet expansion, which drove financial momentum.
“Air India’s top brass appears to be signalling that FY27 will be a year of tighter financial control in an environment marked by volatile fuel prices, higher operational costs from rerouted international flights, and weaker discretionary spending by consumers. Like other airlines globally, Air India is rebalancing growth ambitions with profitability targets,” said Gagan Dixit, senior VP - Oil & Gas and Aviation at brokerage Elara Capital.
Other than network rationalization, it is trying to cut down discretionary expenditure and improve operational efficiency. That suggests management views the present turbulence as cyclical rather than structural, he added.
“The deferment of increments also indicates that airline executives expect external pressures to persist for at least some more time,” Dixit said.
The absence of layoffs and the continuation of variable pay are important signals internally. They indicate that the airline still expects medium-term demand growth and wants to maintain employee morale during a period of operational transition and market uncertainty, he added.
Ending air routes
Route cuts will continue as the airline plans to rationalize operations amid the current rise in operational costs.
Air India has already reduced some international operations for April and May, with cuts extending into July, after soaring jet fuel prices, longer flying routes due to airspace closures, and operational disruptions rendered several international flights unprofitable, Wilson had said in an earlier internal memo.
“To partially compensate for the huge spike in costs, we have increased airfares and imposed fuel surcharges, but, understandably, these higher airfares impact customer demand, so we can only raise fares so far before people decide to stay home,” he had then said.
The aviation sector has also seen a slowdown in domestic air traffic growth since covid. Domestic air traffic growth slowed down to 1.3% to 167.46 million in FY26, sharply down from the over 7% growth of FY25, as per data from the aviation safety regulator, the directorate general of civil aviation.
Jet fuel, a key component of airline operating costs that normally accounts for 35-40%, has remained highly volatile, adding pressure to international operations already impacted by geopolitical disruptions and longer flight times.
While the civil aviation ministry capped domestic jet fuel price hikes at 25% in April and kept prices unchanged in May, the relief does not apply to international flights, where fuel prices doubled in April and rose another 5% in May.
Air India, which is owned by Tata Sons with a 73.82% stake and Singapore Airlines Ltd (SIA) with 25.1%, has also been seeking additional funding from its shareholders, although the amount committed could not be independently ascertained by Mint.
About the Authors
Dipali Banka is a Mumbai-based journalist who treats corporate reporting less like a beat and more like a puzzle to be solved. This invariably means she has to read through annual reports and speak with leaders and analysts. She tracks policies, deals, and the pulse of industries spanning metals, mining, paints, and cement, alongside aviation. She started out as an intern at The Statesman and then completed her postgraduate diploma in journalism from Asian College of Journalism, Chennai, in 2025. Relentlessly curious at heart, Dipali is driven by the simple urge to understand how things work and who they impact. Armed with an enduring fascination for steel and aeroplanes, she moves through the churn of daily news with focus, turning complexity into clarity without losing the story. She is particularly committed to shaping numbers into objective narratives, having little appetite for vagueness that gets in her way.<br><br>Outside the newsroom, Dipali is an unapologetically loud presence who values long conversations and longer walks to unwind. She devours books of all kinds and can often be found indulging in the lyrical sway of contemporary ghazals. She ardently believes that her relationship with her bylines is more sacred than it would ever be with anyone across the human race.
Abhishek Law has spent 18 years in journalism, which in news industry terms means he has survived several newsroom restructurings, countless “urgent” press releases, and more cups of tea than he can reasonably count. Based in New Delhi, he covers aviation for Mint, a sector where aircraft, oil prices, geopolitics and airline CEOs regularly conspire to make his life interesting.<br><br>Most of his time gets occupied by translating airline jargon like ASKs, yields, load factors and fleet strategies into language that doesn’t require a pilot’s licence. His motto is simple: if readers need a glossary, he hasn’t done his job properly.<br><br>On most days, the quadragenarian is tracking airline strategies, policy changes and the occasional mid-air disruption that suddenly become a stock market story. When planes are behaving themselves (which is not very often nowadays), he strays into other corporate beats like steel, trying to figure out what’s really happening.<br><br>He loves to talk, especially ask—that one more question which people are uncomfortable with, and saving contacts in his phone as a "Source who may or may not pick up calls”. <br><br>But, on a serious note, the goal remains simple: cut through jargon, find that additional detail, and turn complicated business stories into something one can actually enjoy reading.
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