Air India set to lay off 200 staff to recast business

Air India is set to lay off about 200 people as its new owner, Tata group, continues to restructure the erstwhile state-run airline as part of a broader consolidation of the conglomerate's airline business.

Air India said the retrenched staff will comprise less than 1% of its workforce who had not taken voluntary retirement schemes or availed reskilling opportunities given by the airline.

Air India has more than 18,500 employees while group airline Air India Express has around 6,200. The two airlines had a total workforce of 12,085 people, including contractual workers, when Tata group acquired the airline.


"We are honouring all contractual obligations during this process," a spokesperson for Air India said. According to a communication sent to the employees and seen by ET, the retrenched employees will receive a compensation package equivalent to 15 days' salary for each year of service with the airline.

The salt-to-steel conglomerate took control of Air India in January 2022. As part of the agreement with the government during privatisation, the new owners had to retain all employees of Air India for a year. The airline had earlier announced two rounds of voluntary retirement schemes which were availed by more than 2,500 employees.

"As part of our multi-year transformational initiative, we are witnessing the emergence of the new Air India. One key aspect of this transformation is to build an agile and effective organisational structure in line with the business model to support our expansion and ambition. As part of the fitment process, employees in non-flying functions have been assigned roles based on organizational needs and individual merit," the spokesperson said.

The spokesperson said a comprehensive process has been followed to assess the suitability of all employees over the past 18 months during which there have also been multiple VRS schemes besides reskilling opportunities for employees. "However, for those employees who have not been able to utilise VRS or reskilling opportunities, we have to part ways," the spokesperson said.

Air India had roped in Boston Consulting Group for restructuring its large workforce. As part of the initiative, the airline added new talent, revamped organisational roles and increased salaries of existing staff to bring them on par with new recruits.

In FY23, Air India widened its net loss to ₹11,381 crore from ₹9,591 crore in FY22, due to write-offs and exceptional items.

Since the Air India deal, the Tata group has been consolidating its aviation business by merging Air India Express and AirAsia India to create a low cost airline while Vistara will be merged into Air India to create a full service carrier. To expand its headcount, Air India has hired aggressively from rival airlines and also from other industries. The group has also tapped people from other Tata companies. "We have hired more than 250 top-notch graduates from premier institutions. Our technology team based in Kochi and Gurugram are attracting some of the best talent in the industry," Satya Ramaswamy, chief digital and technology officer at Air India said.