Air India Defers Salary Hikes, Rules Out Layoffs Amid Global Headwinds

Air India CEO Campbell Wilson on Friday signalled a shift toward fiscal conservatism, urging employees to maintain a "relentless focus on costs" as the airline grapples with a volatile cocktail of geopolitical tensions and soaring operational expenses, as per sources.

Sources said that, during a company-wide town hall, Wilson, alongside key executives, CHRO (Chief Human Resources Officer) Ravindra Kumar GP and CFO Sanjay Sharma, balanced a sombre outlook on global "headwinds" with a reassurance that the airline's long-term transformation remains on track.

The sources shared that Wilson outlined the significant external challenges facing the aviation industry and their impact on Air India.

These include the continued closure of Pakistan airspace that is expected to persist for the foreseeable future, geopolitical conflicts leading to disruptions and airspace closures across West Asia, a sharp depreciation of the rupee, and a 2.5x-3x increase in jet fuel prices.

Collectively, these factors have adversely affected travel sentiment and consumer confidence.

Will Air India's Cost-Cutting Drive Hurt Employee Perks and Customer Experience?

Jet fuel, which constitutes a substantial portion of operating costs, remains highly volatile, adding to cost pressures on international operations.

Emphasising the need for discipline in the current environment, Wilson called for a relentless focus on costs.

He urged employees to suspend discretionary spending, renegotiate rates where feasible, and defer non-critical expenditures.

Sources said the AIR India CEO called for a 'laser-sharp focus on eliminating wastage and leakages', while highlighting the importance of continuing to improve customer experience, as reflected in the Net Promoter Score (NPS), in a cost-conscious manner.

Sources also shared that CHRO Ravindra Kumar GP said that Air India will proceed with variable pay for the last financial year and continue with planned promotions.

However according to the sources the CHRO emphasised that the Airline does not anticipate layoffs, while noting that annual increments will be deferred by at least one quarter in light of the uncertain economic environment.

According to the source, CFO Sanjay Sharma noted that while strong revenue growth and fleet expansion drove financial momentum through FY25, FY26 has seen a softening in revenue amid heightened external uncertainties.

This follows a period of robust performance, with Air India delivering an approximate 40 per cent CAGR in revenue between 2022, when the airline was privatised, and 2025.

(With inputs from ANI)