Air India is considering cutting staff and reducing flight routes due to deepening financial losses. The carrier’s precarious situation is worsened by the ongoing Iran war and the fallout from the fatal crash of Air India flight AI-171 in June 2025.
Why is the airline in trouble?
According to Bloomberg, Air India posted a record loss of over ₹220 billion (just under £1.7 billion) in the financial year ending March 31, 2026. The Iran war is one of the main sources of strain for the airline, which was already struggling before its outbreak. The ongoing conflict has led to higher fuel prices, weaker demand and restrictions on Iranian airspace. This is particularly disastrous for Air India as it was already facing airspace closures linked to India’s border flare-up with Pakistan.
Additionally, the airline is under pressure in the aftermath of the crash of Air India flight AI-171 in June 2025. The flight, which was bound for London from Ahmedabad, crashed shortly after takeoff, killing 260 people on board. This made the incident one of India’s deadliest aviation tragedies in recent years. The final report from India’s Aircraft Accident Investigation Bureau regarding the crash is pending and is expected to be released soon.
What next?
In May this year, the airline cut around 90 daily flights as a cost-saving measure. It is now also considering cutting 100 daily flights throughout June to August, including numerous long-haul flights.
Alongside this, the possibility of implementing furloughs for non-technical employees, slashing bonuses and making executive pay cuts has been considered. According to The Times of India, the airline is even planning to make in-flight meals optional on its domestic and short international flights, which would further reduce costs.
These measures were discussed at a board meeting on May 7, 2026, and could be implemented if the situation does not improve for the airline. For now, the future of Air India is uncertain.
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