The Tata Group-owned airline has recorded losses of more than $2.8 billion for the financial year ending March 2026, according to shareholder Singapore Airlines, marking the worst annual loss in the carrier’s recent history. The figure has not only rattled confidence around Air India’s revival plans, it has also dragged down Singapore Airlines’ own earnings and renewed questions about how long the Indian carrier’s recovery may take.
Singapore Airlines, which owns a 25.1% stake in Air India following the merger with Vistara, disclosed that its share of losses from the Indian airline totalled around S$945 million during the year. That contributed heavily to a 57.4% fall in annual profit at the Singapore carrier, whose net earnings dropped to S$1.18 billion from S$2.78 billion a year earlier.
For Air India, the scale of the damage reflects a brutal combination of war-related fuel costs, airspace restrictions, currency pressure, aircraft supply delays and the after-effects of last year’s deadly Dreamliner crash in Gujarat that killed 260 people.
The airline has not yet formally filed its earnings with Indian authorities and declined to comment publicly. Yet the disclosures made through Singapore Airlines paint a stark picture of an airline still fighting to stabilise itself despite one of the most expensive turnaround efforts in Indian aviation history.
The losses arrive at a deeply awkward time for Tata Group, which has spent the past few years trying to rebuild Air India after taking control from the Indian government in 2022. The acquisition was meant to restore the airline’s reputation and create a serious rival to IndiGo in one of the world’s fastest-growing aviation markets. Instead, the carrier has found itself battered by events largely outside its control.
The Iran conflict has become one of the airline’s biggest financial headaches. Higher oil prices have sharply lifted aviation fuel costs, which already account for one of the largest expenses for any airline. At the same time, Pakistan’s closure of its airspace to Indian carriers forced Air India to reroute several long-haul flights, particularly those heading towards North America and Europe.
Those detours added hours to flight times and sharply increased fuel burn. Industry sources estimate the airspace restrictions alone added thousands of crores of rupees to Air India’s costs over the year. Some routes became so expensive to operate that the airline was forced to reduce frequencies or suspend services entirely.
The pressure became visible this week when Air India announced cuts to nearly 100 international flights alongside temporary suspensions on seven overseas routes. The reductions amount to a 27% cut in international capacity, a striking retreat for a carrier that had previously promised rapid overseas expansion.
The airline’s troubles extend far past fuel bills and route detours. Aircraft delivery delays have also disrupted fleet renewal plans. Like many airlines worldwide, Air India has been caught in supply shortages affecting engine manufacturers and aircraft maintenance systems. Delays in receiving new aircraft have left the airline operating older jets for longer periods, increasing maintenance costs and limiting scheduling flexibility.
Singapore Airlines acknowledged those pressures directly in its annual report. The company said Air India continues facing supply chain problems, restrictions affecting Middle East routes and elevated jet fuel prices. Even so, the Singapore carrier insisted it remains committed to the investment, describing Air India as an important part of its multi-hub airline model.
That public support matters because the financial warning signs are becoming harder to ignore. KPMG, the auditor reviewing Singapore Airlines’ accounts, stated there were “indicators of impairment” linked to the Air India investment due to difficult operating conditions and geopolitical uncertainty.
In plain terms, auditors are questioning whether the current value assigned to the investment still makes sense given the airline’s financial deterioration.
Geopolitics, fuel costs and safety scrutiny deepen pressure on Air India
The numbers surrounding Air India’s losses reveal how quickly external events can overwhelm even ambitious airline revival plans. According to people familiar with the matter, unfavourable currency movements alone may have cost the airline between ₹7,000 crore and ₹8,000 crore during the year. Changes linked to India’s labour code rules reportedly added another ₹1,000 crore to ₹1,500 crore.
Yet the larger damage came from fuel and route disruption tied to regional conflicts. Airlines rely heavily on efficient routing to keep costs under control. When aircraft are forced into longer paths due to restricted airspace, every extra hour in the air adds fuel expenses, crew costs and maintenance pressure.
For Air India, the closure of Pakistani airspace created severe strain because many of its long-haul routes naturally pass westward through that corridor. Flights between India and North America became especially expensive to operate. Longer routes also created scheduling complications, reducing aircraft utilisation rates at a time when spare planes are already limited.
Then came the political and reputational pressure after last year’s Dreamliner crash in Ahmedabad. The accident placed the airline under intense scrutiny from passengers, regulators and aviation analysts. Safety concerns quickly became tied to wider criticism about aircraft maintenance, customer service and operational reliability.
The Tata Group has poured money into upgrading cabins, refurbishing aircraft interiors and rebuilding Air India’s image. But airline turnarounds rarely happen quickly, especially when operational disruption collides with rising costs.
The contrast between Air India and foreign competitors has become increasingly noticeable. As Air India cuts flights, rival airlines are stepping in to capture demand. Lufthansa Group and Cathay Pacific are among carriers increasing services into India, taking advantage of reduced competition on several international routes.
India remains one of the fastest-growing aviation markets in the world. Passenger demand continues rising as middle-class travel expands and international tourism recovers. Yet growth in passenger numbers does not automatically guarantee profits. Airlines remain highly exposed to fuel prices, currency swings and geopolitical disputes.
Singapore Airlines appears determined to remain patient despite the financial pain. The company reiterated that Air India still fits into its long-term plans and pointed to fleet renewal and service upgrades already underway. The merger with Vistara was also intended to strengthen Air India’s premium travel business and improve its position against foreign competitors.
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