To enhance profitability and streamline operations, Tata Group-promoted Air India has launched an asset optimisation exercise which is expected to yield savings of over ₹1,800 crore by the end of FY27, sources told businessline.

As per sources, the programme known as “Route to Profitability 2027” focuses on renegotiated contracts in areas such as operations, fuel, lounges, ground handling, and catering.

The programme has been in the works for the past ten months and “has shown significant results,” sources told businessline.

When contacted, an Air India spokesperson did not comment on the savings figure but said that Air India’s five-year transformation programme Vihaan.AI has entered its third year with “many of the key building blocks having been put in place, focus is now being applied to operational robustness, efficiency, and consistency of products and services.”

“One of the work streams pertaining to efficiency has been a comprehensive review of contracts and cost-effectiveness across the company. This has been ongoing for many months, with the actions and results overseen by the company’s management committee,” the spokesperson said.

The airline has completed the first two phases of Vihaan.AI, known as Taxi and Take-off, entered the final phase, Climb. 

Climb phase

In the Climb phase, the focus of the airline is to create a fully integrated airline with the merger of Air India and Vistara, improve customer value propositions, and drive profitability.

According to sources, a newly formed managing committee dedicated to addressing any inter-departmental concerns regarding the programme has been set up.

“Air India’s CEO and MD Campbell Wilson is overseeing the execution of this strategy, ensuring its smooth implementation across the airline,” sources said.

Sources emphasised that passenger amenities will remain intact.

“The company is focused on cutting down unproductive services or excessive costs, ensuring that any savings do not impact the quality of the customer experience,” sources said.

Notably, all the departments, including fuel management and engineering, have been tasked with specific goals to reduce costs and boost profits.

Sources pointed out that the focus is on fuel optimisation. Notably, fuel cost forms a major portion of an airline’s operational expenditure.

“Targets have been set to reduce the weight of each flight by upto 10 kg to improve fuel cost per available seat kilometre (Fuel CASK),” sources told businessline.

“Weight reduction measures will lead to lower fuel consumption and lesser charges. The savings gained from weight reduction will compound with every flight.”

Besides, the airline is pushing to renegotiate all contracts with service providers, aiming to consolidate agreements, as well as securing multi-station discounts.

“The programme is far more than being a simple cost-cutting exercise. The strategy is an effort in optimising assets across operations,” sources said.

“The airline is utilising technology to reduce dependency on manpower, driving automation wherever possible.”