Daybreak - The jet fuel crisis is only the most convenient explanation for what’s happening to Air India

Episode Date: May 12, 2026

Air India’s board met in Mumbai last week to discuss cost cuts, CEO succession, and whether to start charging business class passengers separately for meals and lounge access. The airline is projecting losses exceeding ₹22,000 crore for the financial year just ended, nearly double the year before. Campbell Wilson is stepping down as CEO. International flights are being cut by over 20%. Jet fuel costs are up 63% since the war on Iran began. But the crisis arrived at an airline already deep in trouble. In today’s episode, we look at what was happening inside the Tata turnaround long before the war on Iran began.Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.

Last week, Air India's board met in Mumbai. Their agenda included cost cuts, CEO succession, and the one item that stood out was whether to start charging business class passengers separately for their meals and lounge access. The airline is considering unbundling all of these from their tickets as a part of its desperate efforts to manage costs at a time when the jet fuel crisis is worsening with the war on Iran. Now, this is from an airline that just in September 2022 came back into the Tata Group ownership with one of the most watched privatizations in Indian corporate history.

The government had already run Air India to the ground over 69 years, and Tata was meant to fix it. They brought in Campbell Wilson, a Singapore Airlines veteran who had built Scoot the budget carrier from scratch as CEO. The five-year transformation plan was called Vihan AI, and it seemed like there was nowhere to go but up from there. Four years have passed since, and the airline is projected to post losses exceeding 22,000 crore rupees for the financial year that just ended. This is nearly double of what it lost the year before, and Wilson is stepping down.

All of this as the jet fuel for international flights cost them. 63% more than before the war on Iran. The board is also discussing cutting flight capacity by over 20% over the next three months and following non-technical staff and also reducing bonuses. Now, to be fair, every one of these problems does have an external explanation. The fuel crisis is real and so are the airspace closures. All of these things have adversely affected. Air India. But if you step back and look at the bigger picture, this was the once-in-a-lifetime opportunity

in global aviation for India. A window has opened up because of the crisis in the Middle East and the airline that was built specifically to make the most of it is the one that is falling apart. Welcome to Daybreak, a business podcast from the Ken. I'm your host, Nickas Sharma, and I don't chase the news cycle. Instead, every day of the week, my colleague Rachel Vargas Gies and I will come to you with one business story that is worth understanding and worth your time. Today is Wednesday, the 13th of May. To understand how Air India got here, you have to go back before the fuel crisis started. In FY 2025, Air India Group posted losses to the tune of nearly 10,000 crore rupees.

The Vihon AI transformation was three years old at this point and the airline was losing money at a scale that no external crisis can be blamed for. Then came June 12, 2025. Air India Flight 171 took off from Ahmedabad, bound for London Gatwick. 32 seconds after takeoff, it crashed into the hostel block of a medical college. 241 of the 242 people on board died. 19 more on the ground. This was the deadliest aviation disaster of the decade and the first fatal crash involving a Boeing 787 since the aircraft entered service in 2011. A month later, the DGCA, the Aviation Authority of India, conducted its routine annual audit for Air India,

which was a separate exercise from the crash investigation. Reuters reported that the regulator found 51 safety lapses from inadequate pilot training to the use of unapproved simulators and a flawed crew rostering system. Seven of them were classified as level one serious breaches requiring immediate correction. By early 2026, which is this year, all of this was the backdrop. The mounting losses, the crash, the safety audit, a CEO search which was already underway when the fuel crisis arrived.

Jet fuel for international flights became 63% more expensive, practically overnight. Pakistani airspace had already been close to Indian. carriers since May 2025, and the Iranian airspace closed with the war. Every western flight was now being rerouted, which meant longer flights, burning more fuel and costing more to operate. But an airline with foundations as strong as that of Air India might have been able to absorb some of this shock at least. Which brings us to why this matters beyond Air India itself.

because at the exact moment that the airline was becoming weaker, a rare window had opened up in global aviation that India had been waiting decades for. More on this in the next segment. India has had a hub ambition for a long time now. You see, Delhi sits at the geographic intersection of Europe, Middle East and Southeast Asia. And for decades, that traffic has flown through Dubai,

Doha and Abu Dhabi. Indian passengers connecting to London or Singapore or Sydney have been doing it through the Gulf airports, which means all that money is going into the Gulf economies and this has helped Gulf carriers become some of the most powerful airlines in the world. So, the Indian government's national civil aviation policy decided to set a target. Make India the aviation hub of choice for Indian passengers by 2030. and for the world by 2047.

The Ministry of Civil Aviation has already cleared Delhi as the country's first hub airport with operations expected from June 1st this year. And all of this ambition has actually always depended on one thing, an Indian carrier that is capable of anchoring it. The Iran War and the fuel crisis created an unexpected opening. Gulf carriers reduced frequencies on certain routes. Fares between Europe and Asia rose sharply, driven by high-demand-meeting-shinking capacity. In fact, Indigo introduced fuel surcharges of 900-rupes for flights to the Middle East

and 2,300 for flights to Europe from mid-March onwards. See, the Gulf carriers are not retreating permanently. Emirates, in fact, posted record profits even as it trimmed some frequencies. But the window is still open from this summer into a room. autumn, and there is more room on the Europe-India-South-East Asia corridor than there has been in years. And this was Air India's moment to show up. Instead, the airline cut its weekly international departures by 288. Air India Express reduced its international operations from 959 to 451 weekly flights, which is a fall of 53%. And that vacuum is being filled. And that vacuum

is being filled partially by Indigo. The low-cost carrier launched long-haul flights to London, Amsterdam, Manchester and Copenhagen last year. And it closed 2025 with 123 million passengers. Indigo was built for domestic market and it is still improvising its way into long-haul aviation with borrowed aircraft and lease slots. So it cannot be what Air India was supposed to be, which is a full, service carrier with the network, the brand and the balance sheet to compete for premium connecting traffic

on the world's busiest corridors. So Delhi has already been cleared as the country's first hub airport with operations expected from 1st of June. So the hub plan is happening irrespective. It's just one tiny issue. The airline that was supposed to carry this plan forward is far from ready. Daybreak is produced from the newsroom of the Ken, India's first subscriber-focused business news platform. What you're listening to is just a small sample of a subscriber-only offerings and a full subscription offers daily, long-form feature stories, newsletters and a whole bunch of premium podcasts. To subscribe, head to the Ken.com and click on the red subscribe button on the top of the website. Today's episode was hosted and produced by my colleague, Snitha Sharma, and edited by Rajiv Sien.