Estimated reading time: 13 minutes

When Air India was owned by the Government of India in FY21, it was losing ₹19.2 crores every single day. Bad enough. But in FY26, under the Tata Group, Air India is losing ₹42 crores every single day. 

The same Tata Group that built TCS into a ₹52,000 crore profit machine. That took Jaguar Land Rover from ₹2,400 crores in losses to ₹27,000 crores in profits. That turned Tata Salt into a ₹4,000 crore brand. 

How is it possible that the Tatas are doing worse than the government bureaucrats they replaced? 

That’s the question worth sitting with. 

Why Is Air India Losing More Money Under the Tatas Than It Did Under the Government? 

The Tatas didn’t come in and do nothing. They came in swinging. 

They absorbed ₹15,300 crores in Air India’s existing debt. Paid ₹2,700 crores in cash to the government. Infused ₹9,558 crores alongside Singapore Airlines. Announced a ₹3,300 crore program to fix existing aircraft. And placed the largest aircraft order in Indian aviation history: 470 new planes. 

On paper it looked like the greatest turnaround story India had ever seen. 

• The investment was enormous and genuine 

• The intent was clearly serious 

• The plan was genuinely ambitious 

And yet Air India is in its worst state possible. The airline accounted for more than three-fourths of the combined losses of Tata’s three biggest businesses. 

So what actually went wrong? 

The Four Traps Air India Got Stuck In 

What Hit Air India Before Any of These Traps Even Kicked In? 

Before we get into the four traps there’s something that happened in 2025 that alone could have broken a healthy airline. 

Operation Sindoor. In April 2025, Pakistan closed its airspace to Indian carriers specifically. 

Emirates can still fly over Pakistan. Lufthansa can still fly over Pakistan. But Air India cannot. 

Before the closure a Delhi to Chicago flight would fly northwest over Pakistan and reach its destination in roughly 14.5 hours covering about 12,500 kilometres. Pakistan effectively functioned as an aviation highway between Northern India and the West. 

After the closure Air India can’t just shift the route slightly north because of the Himalayas, restricted airspace, and safety requirements. Instead westbound flights from Delhi now fly south first, away from the destination, then arc through Ahmedabad, the Arabian Sea, Muscat, and Vienna before reaching North America. 

• The Delhi to Chicago route now covers 2,500 extra kilometres 

• Travel time goes up by 4.5 hours 

• In just five months this cost Air India ₹4,000 crores 

An internal Air India document estimates this cost at $591 million or nearly ₹5,000 crores over 12 months. The Mumbai to San Francisco route became completely unviable. The Delhi to Washington route got suspended entirely. 

The result: foreign airlines now operate a record 58.4% of India’s international flights. And a staggering 95% of India’s international cargo flies on foreign carriers. 

Every time an Indian package leaves the country the money goes into a foreign airline’s pocket. 95% of the world’s fifth largest economy’s cargo. On foreign planes. 

For founders: Air India’s biggest competitor isn’t IndiGo or Emirates. It’s geography and geopolitics. Sometimes the problem you’re solving isn’t the problem that kills you. 

Why Couldn’t the Tatas Just Fix the Seats? 

This is where most people assume the answer is obvious. If the seats are bad just replace them. 

Air India tried. They launched a $400 million retrofit program specifically to fix the aircraft interiors. 

Then they discovered what a business class seat actually is. 

It’s not furniture. It’s a certified aerospace machine that has to survive a 16G crash test, integrate electronics, motors, and airbags, and get regulatory sign-offs before it can be installed in any aircraft. The certification process alone takes years. 

• Only a handful of companies on earth can manufacture these seats 

• Four out of five of Air India’s seat suppliers are running chronic delays 

• One supplier exited the program entirely saying they couldn’t design, certify, and produce at the volume Air India needed 

The retrofit program is now running two years late. Passengers still don’t know what seat they’re going to get when they board. 

For founders: supply chain constraints don’t care how much money you’re willing to spend. Air India had the budget. The global manufacturing capacity simply didn’t exist to absorb their order. 

Why Can’t Air India Just Wait for the New Aircraft They Already Ordered? 

Air India ordered 470 new aircraft. The largest order in Indian aviation history. 

Here’s the problem. As of mid-2026, Airbus and Boeing have a combined backlog of 10 to 12 years of production. There are 16,683 aircraft already in the delivery queue ahead of Air India’s order. 

When you place an order you don’t get a plane. You get a position in a line. 

And that line is getting longer not shorter because of two more supply chain disasters happening simultaneously. 

• Pratt and Whitney discovered contaminated powder metal inside its GTF engines forcing 648 aircraft to be grounded 

• Russia supplied 65% of Airbus’s titanium and 35% of Boeing’s titanium before the Ukraine war. The world now doesn’t have enough titanium 

• Boeing’s quality issues got so severe that they told Indian carriers they could only deliver two aircraft per month to all Indian airlines combined. That’s 24 planes a year for the entire country 

Air India might genuinely have to wait a decade to complete their fleet. 

What Happened When Four Airlines Became Two? 

The Tatas merged Air Asia India and Vistara into Air India and Air India Express under a program called Vihan.ai. 

On paper it was brilliant. Four overlapping airlines consolidated into two clean brands. 

In practice it created something nobody anticipated: a culture war. 

Vistara was India’s most loved premium airline. Its pilots had their own pay structure, their own culture, their own identity. When the merger moved Vistara pilots into Air India’s pay structure they revolted. 

• Mass sick leaves 

• Cancelled flights 

• A full-blown cultural collision between Vistara’s premium service culture and Air India’s decades-old government legacy 

And underneath all of it: 69 years of technical debt. 137 out of Air India’s 166 aircraft had recurring defects. 54 out of 101 Air India Express aircraft had issues. The June 2025 crash intensified the pressure and the cost. 

You cannot uninstall a 69-year-old operating system in four years. The Tatas bought the brand. They also bought everything that came with it. 

Air India vs. What a Successful Airline Turnaround Actually Looks Like 

What Is the Plan to Actually Fix This? 

Air India has appointed Tewolde Gabriel Mariam as its new CEO. Between 2011 and 2022 he took Ethiopian Airlines from $1 billion to $4.5 billion in revenue, from 33 aircraft to 130 aircraft, and from 3 million to 12 million passengers. He turned it into Africa’s most profitable airline. 

His mandate for Air India is built around one central idea: turn Delhi into a hub. 

How does an airline hub actually create value? 

Emirates didn’t become a billion dollar empire by serving Dubai. It became one by making Dubai the place where the world connects. One third of the entire world’s population lives within a four hour flight of Dubai. Two thirds within eight hours. 

Delhi has a similar geographic advantage that nobody has fully exploited yet. 

• Bangkok is four hours and twenty minutes from Delhi 

• Hong Kong is five hours forty minutes 

• Singapore is five hours forty-five minutes 

• London is eleven hours on a nonstop flight 

• The London to Singapore route via Dubai is a 462 kilometre detour. Via Delhi it’s only eight kilometres out of the way 

What does building a hub actually do for Air India? 

If Air India launches a Delhi to Rome route Delhi alone might not fill the plane every day. But if Air India feeds Delhi with passengers from Jaipur, Lucknow, Kathmandu, Bangkok, and Colombo suddenly the Rome flight has demand from six different markets. This is called traffic aggregation. 

• More routes become economically viable because no single city has to fill the plane alone 

• Every new route strengthens every existing route through network effects. Adding Delhi to Bangkok doesn’t just create one connection. It creates Bangkok connections to London, Paris, Frankfurt, New York, and Toronto 

• Economic value stays in India instead of flowing to Dubai. Landing charges, shopping revenue, cargo revenue, ground handling, maintenance: all of that currently goes to foreign hubs when Indians connect through them 

Air India wants Delhi as its principal global hub, Mumbai as its secondary hub, and Bangalore as its southern hub. They’re also building out maintenance, repair, and operations verticals and expanding cargo alongside the hub model. 

The only thing that can derail it now is whether the aircraft actually arrive on time from Airbus and Boeing, and whether the global titanium shortage gets resolved before the queue moves.

FAQ

Ques1: Why is Air India losing more money under the Tatas than it did under the government?

Ans1: Four overlapping problems hit simultaneously: Pakistan’s airspace closure added ₹4,000 crores in costs in five months alone, the retrofit program stalled because seat manufacturers couldn’t deliver, new aircraft orders are stuck in a 10 to 12 year global production backlog, and the merger of four airlines created a culture war and exposed 69 years of inherited technical debt. Any one of these would have been serious. All four at once is what the numbers reflect.

Ques2: Why can’t Air India just replace its bad seats quickly?

Ans2: Because a business class seat isn’t furniture. It’s a certified aerospace machine that has to pass a 16G crash test, integrate electronics and airbags, and get regulatory approval before it can go into any aircraft. Only a handful of manufacturers on earth can make them. Four out of five of Air India’s suppliers are running chronic delays. One exited the program entirely. The retrofit is now two years behind schedule.

Ques3: Why is the aircraft order backlog such a big problem?

Ans3: Airbus and Boeing together have 16,683 aircraft to deliver with a 10 to 12 year production backlog. When Air India ordered 470 planes they got a position in that queue not planes. The queue is getting longer because of the titanium shortage caused by the Russia-Ukraine war and Pratt and Whitney’s engine contamination crisis that grounded hundreds of aircraft globally.

Ques4: What is the hub strategy and why does it matter so much?

Ans4: Right now when an Indian flies internationally and connects through Dubai, Emirates earns the ticket revenue and Dubai earns landing fees, cargo revenue, shopping revenue, and maintenance income. The hub strategy would capture that economic activity for India instead. Delhi’s geographic position means the London to Singapore route is only eight kilometres out of the way via Delhi versus 462 kilometres via Dubai. If Air India can make Delhi the connection point for those passengers it changes the entire economics of the airline.

Ques5: Is there any realistic reason to be optimistic about Air India’s future?

Ans5: Yes. The new CEO has done exactly this before. Tewolde Gabriel Mariam took Ethiopian Airlines from $1 billion to $4.5 billion in revenue and turned it into Africa’s most profitable airline. The hub strategy is genuinely sound. The aircraft orders are real even if delayed. The investment is serious. The question is whether the titanium crisis resolves, whether deliveries accelerate, and whether the operating system transformation can happen faster than the losses compound. It’s genuinely uncertain. But the plan is in the hands of someone who has executed it before.

Summary 

The Tatas didn’t fail Air India through laziness or incompetence. 

They walked into one of the most complicated business situations in Indian corporate history: a 69-year-old government airline carrying decades of deferred maintenance, a culture of entitlement, and technical debt that no amount of money can instantly erase. 

And then Pakistan closed its airspace. And the seat manufacturers couldn’t deliver. And the aircraft queue stretched to a decade. And four airlines merged into two and sparked a culture war nobody saw coming. 

₹42 crores a day in losses. 

But here’s what’s also true. The Tatas have invested more seriously in Air India than the government ever did. The hub strategy is genuinely intelligent. Delhi’s geographic position is a real advantage that nobody has fully exploited yet. And the new CEO has turned an African airline into a continental powerhouse using exactly this playbook. 

The story isn’t over. It might not even be at halftime. 

What it is, is a reminder that the hardest turnarounds aren’t the ones where the management is bad. They’re the ones where the problems are structural, global, and completely outside the control of even the most capable team in the room. 

The Tatas are rooting for Air India. So is the rest of India. 

Now they just need the titanium crisis to resolve and the aircraft to actually show up. 

Note: Financial figures, operational data, and strategic details referenced from publicly available annual filings, parliamentary disclosures, industry reports, and media coverage of Air India’s operations.