Tata Group-backed Air India has told employees that it does not anticipate layoffs, but has decided to defer annual salary increments by at least one quarter amid mounting cost pressures arising from elevated aviation turbine fuel (ATF) prices, airspace-related disruptions and geopolitical uncertainty, sources told businessline.
The announcement was made during a town hall meeting addressed by Chief Executive Officer and Managing Director Campbell Wilson, along with Chief Human Resources Officer Ravindra Kumar GP and Chief Financial Officer Sanjay Sharma.
Notably, businessline was the first to report on Wednesday that Air India would announce key cost decisions taken at its board meeting through a town hall meet on Friday.
The developments come a day after Air India’s board reviewed the airline’s FY26 financial performance, which was dented by an estimated loss exceeding ₹20,000 crore, as earlier reported by businessline.
Interestingly, the board meeting on Thursday morning was preceded by the remuneration committee’s meeting, where key decisions on payouts were taken, sources said.
Variable pay
During the town hall, the management informed employees that while variable pay for the last financial year and planned promotions would continue, annual increments would be deferred in view of the uncertain operating environment.
Besides, CHRO Ravindra Kumar GP told employees that the airline does not anticipate layoffs despite the challenging operating environment.
Speaking during the town hall, sources quoted Wilson as telling employees that the airline industry continues to face multiple external headwinds, including the continued closure of Pakistan airspace, disruptions and airspace restrictions across West Asia, depreciation of the rupee, and a 2.5x-3x increase in jet fuel prices.
Collectively, these developments have adversely affected travel sentiment and consumer confidence, the management is understood to have conveyed to employees.
Operating costs
Notably, jet fuel prices, which constitute a substantial share of airline operating costs, have become highly volatile and are adding pressure, particularly on international operations.
Besides, Wilson, sources said, called for a “relentless focus on costs”, asking employees to suspend discretionary expenditure, renegotiate rates where feasible, and defer non-critical spending.
“There must be a laser-sharp focus on eliminating wastage and leakages,” Wilson was quoted as saying during the interaction, while also emphasising the need to continue improving customer experience and net promoter score in a cost-conscious manner.
Sources had earlier indicated that the airline’s management was evaluating a series of cost rationalisation measures, including network adjustments, workforce-related actions, and expenditure controls.
According to sources, Air India is studying further route rationalisation, particularly on international operations, alongside measures aimed at improving operational efficiency and redeploying capacity more effectively.
Fleet expansion
Furthermore, sources quoted CFO Sanjay Sharma as saying that while strong revenue growth and fleet expansion drove financial momentum through FY25, FY26 has seen a softening in revenue amid heightened external uncertainties.
Operationally, the airline informed employees that domestic on-time performance improved from 73 per cent to 76 per cent in FY26, while customer net promoter score improved to 30 in March 2026 from 20 in April 2025 and minus 19 in 2023.
In addition, the airline said it has completed retrofit work on its legacy narrowbody fleet and commenced retrofit activity on widebody aircraft, with the first retrofitted aircraft already re-entering service.
The airline also undertook network optimisation measures, strengthened India-Europe and India-Far East operations, deepened synergies with Air India Express by eliminating overlapping routes and improving network efficiency, and expanded its Southeast Asia feeder network from two destinations to seven.
Published on May 8, 2026