India's Aircraft Accident Investigation Bureau (AAIB) is expected to release its final report on the crash of London-bound Air India flight AI-171 within a month. The flight crashed seconds after taking off from Ahmedabad on June 12, 2025, resulting in 260 fatalities. As the aviation world awaits the findings of this tragedy, Air India is facing a deepening crisis marked by a leadership vacuum, mounting financial losses, airspace closures, and a fuel price shock from the Middle East. A series of recent incidents have also raised concerns about the airline's safety and operational record.
Last month, Air India's Chief Executive Officer, Campbell Wilson, resigned mid-term. Losses for the fiscal year ending March 2026 reportedly reached $2.4 billion. Air India is currently the largest loss-making entity within the Tata Group, which acquired the airline from the government in 2022. This financial performance is a growing concern for the Tata board. Local media reported that the board met last week to discuss cost-cutting measures and warned staff of "tough times." The presence of senior Singapore Airlines leadership at the Tata Group's Mumbai headquarters in April has also fueled speculation about increased involvement from Singapore Airlines, which holds a 25.1% stake in Air India.
Aviation experts suggest that Wilson's departure creates a void at a critical time when the airline needs strong leadership to navigate its challenges. Jitendra Bhargava, a former executive director at Air India, told the BBC, "They needed a clear vision right now. Air India had given itself a five-year plan to revamp itself after the privatisation. But one can't really say that it's been a happy ride so far. Between their plan and its implementation, there have been big and growing gaps." Bhargava indicated that the Tata Group may have underestimated the problems inherited from the legacy carrier and that Wilson struggled to assemble an effective team quickly enough to address these issues.
Beyond internal challenges, Air India has continued to face scrutiny for operational lapses and safety violations over the past year. In March, a flight from Delhi to Vancouver was forced to return to Delhi after nearly eight hours of flying because it lacked the necessary regulatory approval to enter Canadian airspace. Air India cited operational reasons for the incident, but Alok Anand of Acumen Aviation consultancy, formerly head of maintenance at Air Deccan, described the situation as "highly unusual and shows there was definitely a breakdown of process somewhere."
Last year, India's aviation regulator identified 51 safety violations at Air India during its annual audit of the country's airlines. Seven of these violations were classified as being of the highest severity, indicating significant potential risks. These findings from the regulatory body add to the airline's challenges in rebuilding trust and demonstrating its commitment to safety standards.
In addition to internal issues, Air India's performance has been hampered by a deteriorating external operating environment. The airline had anticipated inducting dozens of new aircraft to modernize its fleet, but delivery schedules have been significantly delayed due to ongoing global supply chain shortages. This disruption has impacted the planned fleet replacement and expansion, affecting capacity and route availability. Consequently, the number of routes operated by Air India has contracted since 2024, with the discontinuation of key services such as the Delhi-Washington and Mumbai-San Francisco routes. These service reductions are likely to have contributed to the airline's revenue decline.
A significant macroeconomic factor impacting Air India's financial health is the depreciation of the Indian Rupee. The Indian currency has weakened by more than 10% against the US Dollar. This currency depreciation presents a "major challenge for the turnaround," according to aviation analyst Mahantesh Sabarad, because a substantial portion of Indian airlines' operational costs, including fuel expenses, are denominated in US Dollars. The rising cost of operations in dollar terms, coupled with a weaker rupee, directly squeezes profit margins and exacerbates financial pressures on the airline.
Looking ahead, Sabarad suggests that the Tata Group and Singapore Airlines will need to provide substantial financial support, injecting more capital into the carrier to cover its mounting losses. He noted that the $2.4 billion figure, if accurate, is comparable to the significant financial challenge the Tata Group faced two decades ago after Tata Steel's acquisition of Corus Steel. "Shareholder support is required. The Tatas didn't give up then and have experience dealing with such scenarios… but they should start looking at innovative financing arrangements going forward," Sabarad stated.
Alok Anand believes that the situation for Air India could worsen before it improves, particularly concerning its financial performance. "My guess is that the projected losses may be on account of payments made for refurbishments which they might have recognised and the costs and penalties paid to lessors after returning older planes, so these are legacy issues coming to the fore," Anand explained. He further noted that the impact of current factors, such as elevated fuel costs, currency depreciation, and route rationalization, will be "felt more acutely in the months to come," suggesting that the full financial repercussions are yet to be realized.
The ongoing conflict in the Middle East presented an opportunity for Air India to potentially capture a larger share of the international market, especially as the dominance of Gulf carriers has been somewhat diminished. However, this remains a missed opportunity due to the persistent constraint of aircraft availability. The airline's inability to expand its fleet limits its capacity to capitalize on market shifts and competitive advantages, hindering its ability to leverage external factors for growth and recovery.
The ultimate impact of the final investigation into last year's fatal crash on Air India and its reputation remains a critical unknown, according to industry experts. While financial liabilities related to the crash are expected to be largely covered, with no further significant financial surprises anticipated, the reputational consequences could be substantial. "From a reputational point of view, any potentially negative findings in the investigation could damage its image, which will take Air India a lot of effort to repair," Sabarad cautioned. The airline's efforts to rebuild its brand and restore public confidence will be significantly influenced by the outcome of the AAIB's report and any subsequent actions taken.
Air India's current predicament involves internal management challenges, significant financial burdens, operational inefficiencies, and an unfavorable external economic climate. The upcoming crash investigation report adds another layer of uncertainty, potentially impacting the airline's already fragile reputation. The Tata Group's commitment and strategic financial interventions, alongside a renewed focus on operational excellence and safety, will be crucial in determining the future trajectory of the carrier. The path to recovery is fraught with obstacles, and the airline's ability to overcome these challenges will be a testament to its resilience and strategic acumen.
