Air India’s long-awaited turnaround, spearheaded by the Tata Group, has encountered a serious setback after the fatal crash of AI171 on Thursday that killed all but one of the 242 passengers and crew on board.
The accident, which has drawn global attention and prompted a regulatory investigation, threatens to derail the national carrier’s ongoing efforts to reclaim its reputation and modernize operations after years of decline.
How Air India suffered losses for years
Once the pride of India’s aviation industry, Air India has struggled with chronic inefficiency, poor service standards, and mounting debt since the early 2000s.
A troubled merger with Indian Airlines in 2007 only compounded its woes, leading to operational disarray, labor disputes, and a steady erosion of market share.
The airline remained heavily reliant on government bailouts for survival.
Between 2012 and 2020, the Indian government pumped billions of rupees into the carrier, yet it failed to stem the bleeding.
By the time Tata Sons took control of Air India in 2022, the airline’s market share had eroded to around 12%, with its brand and morale in disrepair.
Tata Group steps in with a revival plan
In a landmark move, the Tata Group acquired Air India in January 2022 for $2.4 billion (₹18,000 crore), marking the airline’s return to its original founders after nearly seven decades of state ownership.
The takeover was widely seen as a critical turning point for the struggling airline.
Since then, Tata Group has unveiled a multi-pronged plan to revitalize the carrier, including a massive fleet modernization drive, improvements in customer service, and an ambitious plan to consolidate its four airline brands — Air India, Air India Express, Vistara, and AirAsia India — into two main units focused on full-service and low-cost travel.
A $70 billion deal for 470 aircraft from Airbus and Boeing — one of the largest in aviation history — signalled Tata’s commitment to building a world-class airline capable of competing with global giants.
Air India also invested in overhauling its cabin interiors, digital platforms, and ground operations, alongside aggressive hiring and re-training efforts.
In recent months, early signs of improvement were becoming visible.
On-time performance improved, customer complaints declined, and brand perception began to recover.
Losses narrowed significantly in the 2023–24 financial year, falling 61% to ₹44.4 billion.
Analysts projected that with sustained efforts, Air India could regain profitability within five years and reclaim a stronger presence on international routes
The crash and its potential fallout
Although investigators have not yet established the cause of the crash, and there is no immediate evidence pointing to maintenance or operational lapses, the reputational impact on Air India could be severe.
Experts warn that perceptions of safety are vital for any airline seeking a global footprint, and the crash has already triggered an outpouring of passenger complaints.
Moreover, the financial implications of the crash — from potential lawsuits, insurance claims, and compensation to affected families — could strain the airline’s already tight revival budget.
Air India has been focused on its rebrand, rather than addressing core issues like broken seats and maintenance practices, Mark Martin, founder of Martin Consulting, said in an interview on Bloomberg TV on Friday.
Those issues “should have been the priority,” he said.
On Friday, India’s aviation regulator the Directorate General of Civil Aviation ordered Air India to carry out additional maintenance actions on its fleet of Boeing 787-8/9 aircraft equipped with General Electric’s GEnx engines with immediate effect.
Pakistani airspace closure has also compounded woes
Meanwhile, other challenges are mounting.
The continued closure of Pakistani airspace to Indian carriers has extended flying times on long-haul routes, increasing operational costs.
Earlier this month, Air India CEO Campbell Wilson acknowledged that such constraints posed headwinds to the airline’s path back to profitability.
As the investigation into the crash unfolds, the Tata Group faces a critical moment.
“This is a difficult day for all of us at Air India,” CEO Campbell Wilson said in recorded remarks.
“Our efforts now are focused entirely on the needs of our passengers, crew members, their families and loved ones,” he said.
Its response — in terms of transparency, accountability, and operational review — will be watched closely not just by regulators, but also by the global flying public.
For an airline trying to reclaim its place on the world stage, the next steps may prove decisive.
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