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Air India delays staff salary hikes over rising fuel prices, airspace curbs
Air India has deferred employee annual increments by at least one quarter as the airline steps up cost-cutting amid economic uncertainty.
Air India will defer employee annual increments by at least one quarter as part of broader cost-rationalising measures driven by an uncertain economic environment, its senior executives told employees at a townhall on Friday.
The airline does not anticipate layoffs, chief human resources officer Ravindra Kumar GP said.
The announcement was made at a meeting addressed by Air India chief executive officer Campbell Wilson, alongside Kumar and chief finance officer Sanjay Sharma.
“We will continue to pay the performance-related variable pay for last year, that’s decided — the increment for this year we will defer. We will consider as the environment evolves over the course of the year if and when we can pay it. We have budgeted to pay it when the environment gets better, but we are going to withhold it for now…We do not anticipate any need for retrenchments,” Wilson said.
Wilson highlighted external challenges affecting the aviation sector, including the continued closure of Pakistani airspace, geopolitical conflicts leading to disruptions and airspace closures across West Asia, a sharp depreciation of the rupee, and a threefold increase in jet fuel prices.
“…we weren’t targeting a profit this year, we were targeting a certain amount of loss. We lost more than we were targeting to lose, if you get what I’m saying, but the point is that we achieved 56% of what we had set out to do on the financial front,” he said.
Wilson urged employees to suspend discretionary spending, renegotiate rates where feasible, and defer non-critical expenditures.
“We need to focus relentlessly on our costs in these tough times,” the CEO said. “There must be a laser sharp focus on eliminating wastage and leakages.”
Detailing the airline’s recovery efforts, Wilson stated, “There are many things that we have been doing and will continue to do to build our revenues on the cost side of the equation. It is increasing our scale, so we are spreading our fixed costs across a higher capacity base. It is adopting more technology so that we’re not just doing things less manually, but we are able to do things more efficiently. It is getting new aircraft that are more fuel efficient to replace the old aircraft.”
Addressing route adjustments due to the West Asia crisis, Wilson said: “... with the airspace constraints being what they are, some of the routes we used to operate are not as profitable or indeed a loss making those ones we need to pull back. Sometimes it will be pulling back frequency, sometimes it might be suspending routes entirely. We will go back when circumstances change, but we need to be agile to change our network.”
While strong revenue growth and fleet expansion drove financial momentum through fiscal 2025, fiscal 2026 has seen a softening in revenue amid heightened external uncertainties, Sharma said.
