Air India to stay on expansion course despite challenges

Synopsis

Air India plans to add over 100 aircraft across the group in 2027 and 2028 while continuing its $400-million fleet retrofit programme. The expansion comes as the airline tackles higher operating costs, disrupted international routes and profitability pressures.

Mumbai: Air India plans to add more than 100 new aircraft across the group over 2027 and 2028 and retrofit 16 Boeing 787-8s next year, continuing a fleet overhaul as the airline faces higher operating costs, disrupted international routes and the challenge of returning to profitability.

The airline's $400 million legacy fleet retrofit programme is on track, outgoing chief executive Campbell Wilson told employees at a townhall Thursday. The narrowbody retrofit programme is complete, while work on the widebody fleet is ongoing, he said.

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Air India inducted three retrofitted Boeing 787-8 Dreamliner aircraft this year and expects another four to return to service before the end of 2026. The airline estimates that the entire programme to retrofit 16 airliners will be nearly complete by the end of 2027.

The airline also received three new Boeing 787-9s in 2026 and expects delivery of two Airbus A350-1000s later this year.

Induction of new planes during 2027 and 2028 will add to the fleet of the group comprising full-service carrier Air India and low-cost Air India Express.

The expansion comes at a time when Air India is facing higher operating costs due to geopolitical disruptions and longer flight routings. The closure of Pakistani airspace has increased flight times for Indian carriers by up to three hours on some Europe and North America routes, while disruptions linked to the Iran conflict have added to fuel and operating costs. A weaker rupee and softer India-US demand amid visa restrictions and trade-related uncertainty have also weighed on the industry.

Air India, meanwhile, has reported improvements in operations. The airline's on-time performance (OTP) reached 91.6% in June, its highest-ever recorded by the aviation regulator, while FY27 year-to-date OTP stood at 85%, compared with 76% in FY26. Widebody technical dispatch reliability improved to 97.4%, according to the airline. Its fleet-wide net promoter score, a measure of customer loyalty, rose to +37 in FY27 year-to-date from -35 in FY23.

Profitability remains a key priority for the airline as it invests in aircraft, fleet refurbishment and operations amid the challenging operating environment.

Wilson said annual salary increments for employees, including ground staff and cabin crew, will take effect October 1.