Air India needs saving. Singapore Airlines is playing saviour

Rahel Philipose (0:00)

N Chandrasekaran, the chairman of Tata Sons, has visited Air India's Delhi headquarters about half a dozen times this year. And he's a busy man. Considering all the boardroom drama, his running feud with Noir Tata, the chief of Tata Trust has stirred up.

An airline executive told my colleague Nuhar that the visits show exactly how much Air India matters to Tata. Not just commercially or financially, but as a brand. He told her that Air India is the show horse.

It's a horse that's getting very expensive to keep. In the last financial year, Air India's consolidated losses widened to 22,000 crore rupees from 10,900 crore the year before. That's yet another blow for a carrier that has already been battered by the crash in Ahmedabad and a string of aircraft safety and pilot discipline incidents. So, it makes sense that Chandrasekaran is worried. And so is Singapore Airlines. The state-backed Southeast Asian airline became a shareholder in Air India in November 2024, when it agreed with Tata Sons to merge with Tara into Air India, taking a 25.1% stake. It's only a minority owner, but it's still putting in serious cash and effort to turn the airline around.

Already, Singapore Airlines has booked operating losses of nearly $800 million over its two years of investment. And now, it has been asked to provide a big chunk of the $1.5 billion in fresh equity that Air India wants. Singapore Airlines is inclined to say yes, but with strings attached. This time, it wants greater control over operations, costs, safety and training. The Air India executive told us that the expectation is very clear. Budget remains sacrosanct, timelines are sacrosanct, and whatever it does must stay within those constraints. Singapore Airlines has already made a start. It is helping train cabin crew for Air India's new Boeing 787-9s, a model Singapore Airlines also uses, to improve customer experience. It's also overhauling Air India's engineering and maintenance operations with a plan to open a new facility as well. It's even getting involved in pilot training and management. Tata is on board. But Air India's employees are less so. They are not happy with the change in work culture so far. But it's time for them to get with the plan. Because whether they like it or not, Singapore Airlines is taking command of the Air India turnaround story.

Welcome to Daybreak, a business podcast from The Ken. I'm your host, Rachel Varghese, and every day of the week, my co-host, Snigdha Sharma and I will bring you one new story that is worth understanding and worth your time. Today is Monday, the 19th of October.

When you start a transformation project, it's not a linear journey. You realize, okay, we need more experts. Where do we find more experts? Singapore Airlines. So, they're getting more involved.

That's what the executive I mentioned earlier told NOHA.

Take engineering and maintenance, for instance. Air India has now brought it in-house, and new engineers are training at Air India's own academy. A new repair and overhaul facility is also planned in Bangalore, reducing Air India's reliance on outside vendors like Honeywell, Technic, and Panasonic Avionics. What helps is that Air India's head of engineering and maintenance, Jeremy Yu, is a Singapore Airlines veteran.

Then there's pilot training. It's currently instructing about 2,000 pilots and cabin crew in Gurgaon, with another center opening in Amravati, Maharashtra. And Air India commander told NOHA that six months ago, Singapore Airlines even brought in an Airbus expert from France to assess the training program. The verdict? Many instructors fell short of the required standards and were demoted. This included type-rating instructors, who are certified instructors authorized to train pilots on a specific aircraft model and line training captains. Basically, experienced captains with more qualifications who train and supervise type-rated pilots. Not just that, Singapore Airlines is also tightening the belt for pilots. They are now required to do their own laundry and stay in cheaper accommodations when they travel, which are leaving many of them unhappy with the management.

A second executive explained to us that when cost reduction plans were being put into motion, the biggest cost ended up being sending the crew and bringing them back. So, the company could either put them in shared rooms or downgrade the hotel type. In fact, on a recent Delhi-Riyadh flight, cabin crews shared rooms and pilots stayed in a four-star hotel instead of a five-star one. The executive claimed that the scrutiny of expenses had definitely increased, making the carriers stricter than they used to be two years ago.

And the timing isn't entirely a coincidence. Air India's new CEO, Tivolde Gabramariam, has a mandate to cut costs and rebuild the airline's reputation. He seems like a good fit because he previously led Ethiopian Airlines into Africa's largest and most profitable carrier. And at his first town hall last month, he said that the mandate is now to minimize cost while not compromising on safety. The first executive we mentioned told us that every project is now judged on what it will burn against what it will return. They told us that a cost-centric mindset is being knitted into the organization. And that is for good reason. Air India had been losing money for years before Tata Sons bought it back from the government in 2022, nine decades after launching it. I had done an episode on their latest losses just last month. And I've linked it in the show notes below if you want to give it a listen.