Air India Distributes Significant Compensation to Crash Victims
Air India has disbursed ₹60 crore in compensation to 230 of the 248 victims affected by the tragic air crash that occurred on June 12, according to the airline's chief executive officer Campbell Wilson. The compensation update comes as the Tata Group-backed carrier navigates one of its most challenging years, marked by both the devastating accident and significant operational hurdles.
Compensation Details and Family Support
In addition to the airline's compensation efforts, family members of 70 individuals have received ₹1 crore each through the Tata Group, which established a special trust to assist those affected by the country's worst civilian air disaster in over a decade. The families of another 50 victims are currently in the process of receiving similar compensation amounts.
Wilson emphasized the airline's ongoing commitment during a media interaction in Delhi on Monday, stating, "We continue to reach out to the families of those affected...our commitment to those who have had a loss will continue for as long as it takes."
Operational Challenges and Financial Impact
The CEO acknowledged that 2025 has proven to be an "exceptionally difficult year" for the airline. The challenges include not only the June crash but also the financial repercussions from the May airspace closure by a neighboring country, which forced Air India to adopt longer, circuitous routes over the Arabian Sea.
Wilson previously indicated that if the airspace closure persists for a full year, it could result in staggering losses of approximately ₹4,000 crore for the airline. This substantial financial impact adds to the carrier's existing challenges as it works to stabilize operations.
Fleet Modernization Delays
The airline's ambitious retrofit program, which involves refurbishing current aircraft with new seats and upgraded entertainment systems, has encountered significant delays due to supply chain constraints. Wilson described the supply chain as "constrained," affecting critical components including seats, cabin elements, and overall aircraft availability across the industry.
As a result, Air India now expects to complete its fleet modernization program in 2028, rather than the initially projected 2027. "It's a five-year transformation programme for a reason because it cannot and would never have been done overnight. And so we just have to keep focused on the objective and work through," Wilson explained.
The CEO further elaborated that while most legacy aircraft will be refitted within the five-year transformation period, "It'll probably have a little bit of a long tail where a few of the triple sevens will push out into the sixth year."
Aircraft Delivery and Fleet Strategy
Air India, which is undertaking one of the world's largest commercial aircraft interior retrofit programs, had originally planned to retire 17 older narrow-body aircraft. However, due to persistent delivery delays, these aircraft will be reinducted into the active fleet.
The wide-body transformation has proven particularly complex. The first two 787-8 aircraft currently in Victorville, California, are receiving completely new interiors and are expected to return to service by February 2026. Following this initial phase, the airline plans to process two to three aircraft every month for refurbishment.
Looking ahead to 2026, Air India anticipates receiving 26-30 new jets, including six wide-bodied aircraft for long-haul routes and 20 narrow-bodied aircraft. One additional aircraft is scheduled for delivery in December 2025.
Financial Performance and Market Position
Since the Tata Group's acquisition of Air India in 2022, the company has outlined a comprehensive $400 million program to modernize its existing fleet by early 2027. This retrofit initiative complements the massive order placed with Boeing and Airbus for 570 new planes.
The combined fleet size of Air India and Air India Express currently stands at 297 aircraft. Wilson noted that "the airline's capacity will therefore remain comparatively flat in 2026" due to these ongoing transitions.
Despite reporting substantial revenue of ₹78,636 crore last year, representing a 15% increase, the privately held airline saw its losses widen from ₹7,356 crore to ₹10,859 crore. When questioned about potential fund infusion from promoters, Wilson responded negatively.
Industry analyst Gagan Dixit from Elara Capital commented on the challenges facing Indian carriers like Air India, noting they are already experiencing supply-side constraints. "There will be some pressure on Air India's numbers until the delivery schedules for its aircraft normalize. Compared to market leader IndiGo, there could be some increase in non-fuel costs for Air India. It will also need to rework routes as new airports open up and if it continues to face new aircraft delivery delays."
