Air India Group’s net loss doubled to over ₹6,000 crore in the first quarter of FY27. High fuel costs, foreign exchange fluctuations, and airspace closures caused this sharp rise. CEO Tewolde Gebremariam said, "Cost consciousness must become part of our culture," as the airline started new efforts to save money.
Forex fluctuations, high fuel costs and airspace closures weigh on financial performance
Intense foreign exchange fluctuations, persistently high fuel costs and airspace closures have widened Air India Group's net loss to over ₹6,000 crore in the first quarter of FY27, against more than ₹3,000 crore a year earlier, industry sources told businessline.
When contacted, Air India did not comment on the story.
The Tata Group-promoted airline had ended FY26 with a consolidated loss exceeding ₹22,000 crore, up from nearly ₹11,000 crore in the preceding fiscal.
Characterising the April-June quarter as a "challenging operating environment," insiders reported that conditions have further deteriorated due to rising aviation turbine fuel costs.
Fuel now accounts for over 50 per cent of operating expenditure, sources said.
Longer routes
Besides, airspace restrictions have forced Air India's Europe and North America services to take longer routes, increasing flying time and fuel consumption, while affecting crew deployment and aircraft utilisation.
Air India had earlier estimated that Pakistan's airspace closure could cost it around ₹4,000 crore on an annualised basis.
Furthermore, foreign exchange fluctuations have added to the financial pressure, with leases, maintenance and other requirements involving foreign currency expenditure.
The consolidated forex losses had risen to around ₹7,400 crore in FY26 from around ₹1,500 crore a year earlier.
Operational impact
A senior Air India executive, speaking on the sidelines of an industry event recently, had said restrictions affecting Gulf airspace had compounded the burden of avoiding Pakistan, making the operational impact more severe in 2026 than in 2025.
Consequently, the airline faces higher fuel expenditure on extended journeys and additional landing charges where intermediate stops are required.
Meanwhile, Air India has intensified efforts to contain expenditure and reduce wastage.
Earlier this month, CEO and MD Tewolde Gebremariam told employees that airspace closures, the West Asia conflict and persistently high jet fuel costs were placing significant pressure on airlines.
"Cost consciousness must become part of our culture," he had said, calling for frugality, accountability and thoughtful decision-making.
Cost savings
Gebremariam said a full-time, cross-functional cost savings team had been established to review expenditure and identify savings across the organisation.
"Every rupee we save creates an opportunity to reinvest in areas that matter most, whether it is enhancing our operations, improving our products and customer experience, or strengthening the foundations for our future growth," he said.
On its part, Air India's board has endorsed cost-saving measures and authorised the CEO to act on expenditure and wastage.
It ratified a plan to bring departments of Air India and Air India Express under a common structure to reduce overlapping work and improve efficiency.
The exercise is envisaged over about six months, with both airlines retaining their brands.