SIA’s Air India intervention a ‘capability transplant’ crucial to its long-term play: analysts

[SINGAPORE] Singapore Airlines’ ( SIA ) decision to embed a limited number of executives deep into Air India’s operations is a positive move to protect an asset battered by record losses and entrenched legacy cultures, aviation industry analysts mostly said.

Linus Benjamin Bauer, founder of aviation consultancy BAA & Partners, called it a direct response to deep-rooted operational failings, though he warned that it does not come free of execution risks.

“This is a capability transplant, not a leadership transplant – and that distinction matters.”

Bloomberg News on Apr 23 reported that the Singapore flag carrier is moving executives into key roles across Air India’s flight operations, engineering and maintenance.

This marked an escalation in SIA’s engagement, giving it a more hands-on presence in India’s flag carrier.

SIA has owned a 25.1 per cent stake in Air India since the latter’s 2024 merger with Vistara. Founded in 2013, Vistara was a joint venture between SIA and Tata Sons.

Tata retains a 74.9 per cent stake in Air India.

In response to queries from The Business Times, SIA said that it has been “working closely” with Tata to “support Air India’s transformation programme”.

“This includes providing our expertise to Air India, where necessary,” it added.

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Air India did not respond to queries from BT.

For SIA, the stakes are immediate. Air India’s losses swelled to about US$2.4 billion in 2025. The lack of visibility on when the carrier can turn a profit is a growing worry for SIA, which reported that losses from associated companies, mostly from Air India, hit S$178 million in its third quarter ended Dec 31, 2025.

Retail investors who hold SIA shares for steady dividend yields have been spooked by the rising drag Air India has exerted on the Singapore group’s earnings.

Some have called for it to divest its Air India stake. But analysts say that exiting – especially now – is ill-advised and too difficult.

Capability transplant

Analysts believe that SIA’s deeper involvement is a rescue mission for a transformation that is proving far more complex than Tata likely anticipated in 2021.

BAA’s Bauer said that SIA having its people in Air India “means embedding institutional knowledge at the working level”.

“SIA knows what ‘good’ looks like in these domains at a granularity very few carriers can match,” he added.

The maintenance challenge is particularly massive in scale.

Bauer pointed to data from India’s civil aviation ministry, which showed that 82.5 per cent of Air India’s aircraft analysed since January 2025 had exhibited recurring technical defects; the figure was 36.5 per cent for rival IndiGo.

Air India has also been contending with planes flown without airworthiness certificates and regulatory lapses flagged by European regulators.

However, Bauer warned that SIA’s rigorous standards risk triggering a “cultural antibody reaction” within Air India’s heavily unionised, tenured workforce.

“SIA executives arriving with process rigour that Air India’s middle management hasn’t been socialised into can trigger passive resistance: compliance on paper, non-compliance in practice.”

He added that any split operational structure between SIA and Tata would require active management to prevent contradictory signals at the ground level.

Shukor Yusof, founder of advisory and research firm Endau Analytics, was far less bullish on the move’s probability of success and forecast it would not be effective “at all”.

“It’s too much to expect Air India employees to respond efficiently and quickly to ‘outsiders’ who have been parachuted in and may not have a good grasp of the local work culture,” he said.

Active protection upgrade

Mayur Patel, regional sales director at travel data provider OAG, said that Air India’s bid to return to its 1970s world-class status has been hampered by a combination of external shocks and structural resistance.

About 16 per cent of Air India’s total passenger capacity has been grounded.

“The operational escalation... suggests SIA is now treating Air India not as a portfolio investment but as an asset that requires active protection,” Patel said.

The earliest shock came when Pakistan closed its airspace to Indian aircraft in April 2025, forcing Indian aircraft heading to Europe or North America to reroute over the Arabian Sea.

Patel said this adds up to four hours per journey and an estimated US$600 million in additional annual costs for Air India.

The Iran war that started on Feb 28 has closed another key corridor for Air India, hindering access to a region that accounts for nearly half of India’s international passenger traffic.

Flights such as those from Delhi or Mumbai to New York now have to make a fuel stop in Rome to account for the added distance. Jet fuel costs have doubled on some routes.

OAG data shows that Air India and Air India Express shed over 500,000 seats worth of passenger traffic in April from a year earlier – an 8 per cent decline.

Despite the drop in traffic, SIA still views its Indian investment as a key strategy for the long term; the country’s fast-growing middle-class and massive global diaspora represent a lucrative future prize.

A longer game

Bauer noted that the airline’s revised business plan could push the break-even for SIA’s investment towards FY2029 or FY2030, with FY2028 identified as the earliest window for operational stabilisation.

This represents a significant delay from original estimates, creating a “genuine investor relations challenge” for the Singaporean carrier.

Endau Analytics’ Shukor was also downbeat on SIA having an “easy way out” even if the Singaporean airline wanted to divest its Air India stake, owing to how deeply it was “financially and physically” embedded.

“Structurally there’s much more that needs to be overcome in the domestic aviation market to attain success,” he said. “SIA has said it is in it for the long term, so I guess they’re comfortable to take losses for another decade at least.”

Still, most analysts still view SIA’s strategic rationale as sound.

OAG’s Patel stated that “none of (the) structural logic” behind investing in the Indian aviation market has changed. “What has changed is the timeline and the cost of getting there.”

Alton Aviation Consultancy noted in a February white paper that India is forecast to be one of the world’s fastest-growing air travel markets between 2024 and 2044.

With international traffic in the Asia-Pacific region having risen 8 per cent in 2025, Alton noted that airlines are responding with “strategic moves” and “ambitious partnerships”.

For SIA, holding no domestic market of its own, cementing its footprint in India remains the most efficient long-term growth play.

“SIA’s India bet was always strategically sound,” said Patel, noting that it also serves as protection against Gulf carriers’ longstanding bypass of Singapore as a transit hub on Europe-Asia routes.