Tata Sons-led Air India Group is examining a proposal to integrate some key departments of Air India with those of Air India Express to reduce duplication and costs, sources told businessline.

The proposal envisages common teams for identified functions to streamline operations, improve resource utilisation and unlock economies of scale. Unlike the earlier mergers, involving Vistara in 2024 and Indian Airlines in 2007, when Air India was under government ownership, the proposal under discussion is limited to integrating select functional departments.

Air India did not respond to queries on the discussions.

According to sources, the discussions cover human resources (HR), finance, information technology (IT) and engineering. No final decision has been taken, and if approved, the integration could take about six months to implement.

Marketing has already been integrated as part of the Group’s commercial functions. The Group also has shared leadership across network planning, sales and distribution, and revenue management.

Air India Express currently has separate heads for HR and finance. The proposal could extend the integration to other identified functions by bringing the teams under common leadership.

The proposed arrangement would retain the two airlines’ distinct identities, cost structures and product offerings. Air India would continue with its full-service positioning, while Air India Express would retain its low-cost model.

Under the proposed structure, each identified department could serve both airlines through a common team.

Push for savings

The discussions come amid substantial losses and a broader push for cost savings and consolidation across the Group.

For FY26, Air India and Air India Express, along with their joint ventures and subsidiaries, reported combined losses of ₹22,238 crore on a revenue of about ₹71,870 crore. The financial pressure is evident at both carriers. Air India reported a standalone net loss of ₹15,368 crore in FY26, while Air India Express recorded a net loss of ₹6,767 crore.

At Air India Express, revenue rose 19 per cent to ₹19,088 crore during the year, while operating expenses stood at ₹20,663 crore. “The plan seems to integrate core corporate functions of both these airlines under one leadership team, thereby resulting in better management as well as savings on overheads and potentially unlocking economies of scale,” an industry insider said.

The discussions also come against the backdrop of Air India Group’s renewed push for closer integration.

Focus on synergies

Recently, Air India CEO and MD Tewolde Gebremariam, in his first townhall address to employees, called for greater integration across the Group. He said the airlines already belonged to one Air India Group and that operations would be streamlined and synergies pursued wherever possible, while maintaining a focus on customers.

Gebremariam identified sustainable profitability as a key objective, alongside safety and operational reliability, and stressed the need to improve both revenue and cost performance.

“Cost management is not just the responsibility of leadership or the finance function. Every employee can contribute to savings, and those savings add up across an organisation of our scale,” he said.

If implemented, the proposed integration of corporate functions could improve resource utilisation and reduce overheads while allowing Air India and Air India Express to retain their respective brands and customer propositions.

Published on October 5, 2026