Air India chief explores merger of budget airline unit to stem losses

Air India's top management is actively considering a merger of Air India Express, its budget subsidiary, into the main airline operations as part of efforts to control costs and streamline the carrier's complex structure. The proposal represents a significant strategic shift for the airline, which has faced mounting financial pressures and operational challenges in recent years.

The potential consolidation would combine Air India's two distinct business units—the full-service mainline airline and the low-cost carrier—into a single integrated operation. Proponents of the move argue that such a merger could eliminate duplicate functions, reduce administrative overhead, and improve efficiency across the airline's network and fleet operations.

Air India has struggled with substantial losses as it competes with budget carriers like IndiGo and SpiceJet, which have captured significant market share in India's growing but fiercely competitive aviation market. The airline has faced headwinds from high fuel costs, competitive pricing pressures, and the need for substantial capital investment in fleet modernization and airport infrastructure.

The merger proposal is still under evaluation by senior management and represents one of several options being considered to stabilize the airline's financial performance. Any final decision would likely require approval from the airline's board and potentially government stakeholders, given Air India's status as a state-owned enterprise.