Tata Sons may infuse more capital into Air India amid aviation sector challenges, says N Chandrasekaran

Tata Sons Chairman N Chandrasekaran has indicated that the group could consider pumping more capital into Air India, if the need arises. Speaking on the sidelines of the JRD Tata Memorial Trust event, Chandrasekaran addressed the current volatility in the aviation sector, citing disruptions in global supply chains, capital volatility, and geopolitical tensions as major hurdles. “If there is a condition for it, we can look at it,” he told The Hindu Business Line when asked about the potential funding, though he did not provide any further details or assurances regarding a specific request from Air India for such support.

Air India, which was reacquired by the Tata group in 2021, continues to operate in a challenging environment and reported a consolidated net loss of Rs 10,859 crore on revenue of Rs 78,636 crore for FY25. According to sources, the airline is seeking additional funds of up to Rs 10,000 crore from its promoters, Tata Sons and Singapore Airlines, with both stakeholders already pumping in over 9,500 crore during the financial year. Chandrasekaran stressed that aviation for Tata is more than just a business venture, which highlights the sense of responsibility towards this sector.

Describing the prevailing conditions, Chandrasekaran pointed to ongoing supply chain issues that complicate the timely addition of new aircraft and equipment. He noted that the availability of spare parts, infrastructure and a new fleet remains “highly unpredictable.” As he explained, “Every plan you have is made difficult by the situations you face in the field,” reflecting the operational hurdles facing Air India and the wider industry.

Addressing the financial requirements of running an airline, Chandrasekaran pointed out the cyclical nature of capital allocation and returns: “You put in the capital you need to make returns. Only then can you put in new capital. It’s like a cycle, you need to keep developing constantly.” Additionally, he noted that aviation operates on “a very thin profit margin,” and described a “love-hate relationship with oil prices,” adding: “It has a love-hate relationship with oil prices, so there are many aspects you have to manage.”

Despite these challenges, Chandrasekaran reiterated Tata’s commitment to Air India’s transformation plan. The airline is scheduled to modernize 95-99 percent of its fleet within three years, with new aircraft expected to be added monthly. “We will start having new plans every month for the next three years,” he said, while also emphasizing, “But we have to work on every one of these dimensions, and that is the commitment we are working towards,” as the group seeks improved operations and customer service improvements.

Chandrasekaran also addressed the impact of external factors such as geopolitical tensions and airspace closures, which can lead to longer flight durations, increased fuel consumption, and reduced payloads. “Your journeys take longer, fuel costs go up, payload goes down, which makes customers angry. So we have to manage all of this, but then the demand is very high, and the aspirations of Indians are increasing,” he added, explaining the balance required to deal with industry fluctuations and meet rising passenger expectations.