When do Air India’s losses become too much?
Air India is seeking a further US$1.5 billion in support from owners Tata Sons and SIA just months after it posted a record annual loss, sources told Reuters.
An SIA spokesperson said last week the board would “carefully consider any requests for additional capital from Air India, taking into consideration the group’s other capital requirements and Air India’s business strategy”.
The question for SIA is therefore not simply whether Air India is losing money now, but how much it is prepared to invest before the potential returns no longer justify the additional risk.
DBS analyst Jason Sum said in July that further equity support by SIA was “inevitable”, with the airline likely to provide Air India with more funding over time.
But SIA also has to weigh the returns from Air India against alternative uses for its capital. “Every additional dollar invested in Air India has an alternative use,” Dr Rawat said.
SIA’s earnings have already been affected by its share of Air India’s losses. The Singapore carrier posted a net loss of S$76 million (US$59 million) in the first quarter of 2026, weighed down by higher fuel costs linked to the Middle East conflict as well as a larger share of losses from Air India.
This does not mean Air India has to become profitable immediately, Dr Rawat said, noting that the carrier is in the middle of a capital-intensive transformation, so some losses are expected during the restructuring phase.
“The key economic question is … whether the airline can convert its scale, network and market position into a sustainable competitive advantage and long-term profitability,” Dr Rawat said.
Tata Sons has previously said that Air India’s transformation could take up to a decade, potentially leaving SIA facing years of investment before the airline’s performance fully reflects the changes being made.
That means SIA will have to judge not just the eventual destination, but whether Air India is making enough progress along the way.
Harsh Vardhan, chairman of aviation consulting agency Starair Consulting, acknowledged that creating a new airline with access to a market base comparable to Air India’s would require a far greater investment.
“But SIA has to take a conscious view as to how long they will sustain that kind of help to Air India, and they need to come out with a definite claim of when they are going to reduce the gap and bring in profits,” Mr Vardhan told CNA.
The critical turning point is when additional funding and risks required from SIA start to outweigh Air India’s potential returns, said Dr Rawat.
“At that point, continuing to invest would destroy economic value.”
