Air India Cuts International Flights Amid Iran War and High Fuel Prices

Air India is significantly reducing its international flights during the peak travel season from June to August due to airspace restrictions caused by the Iran war and record-high jet fuel prices. The airline will cut nearly 140 flights per week, which translates to a 27% reduction in its total international flights.

According to aviation sector experts, these changes are aimed at improving network stability and reducing last-minute inconvenience to passengers. Air India's cuts affect routes to North America, Europe, Australia, and Asia. The airline is co-owned by Tata Group and Singapore Airlines.

The conflict in the Middle East has significantly impacted Indian carriers, as they face airspace closures over Iran, Iraq, Israel, Kuwait, Qatar, and the UAE. Additionally, Pakistan's ban on Indian airlines using its airspace since April 2025 has forced costly reroutings.

Air India's scheduled flights from India to Europe fell by 5.1% year-on-year in March-May, but its U.S. routes bore the brunt as scheduled flights plunged by 77.4%. Meanwhile, foreign carriers like Lufthansa and Cathay Pacific have increased their services to India, capitalizing on strong demand for flights from South Asia to Europe and North America.

The financial strain on Air India is further exacerbated by the depreciation of the Indian rupee, which has fallen over 10% against the US dollar. This currency depreciation, combined with high fuel costs and route closures, poses significant challenges for the airline's turnaround efforts.

Air India posted a $2.8 billion loss for fiscal year 2025-26, according to its shareholder Singapore Airlines' annual financial statements released on Thursday. This is Air India's biggest loss since it was acquired by Tata Group in 2022. The airline's leadership vacuum, mounting financial losses, and a series of operational lapses have deepened its crisis.

Singapore Airlines has seen Air India drag on its earnings for about five quarters, but analysts and the airline say the investment will pay off in the long term. SIA reported record revenue of 20.5 billion Singapore dollars ($16.06 billion) for its financial year ended March 31, as operating profit surged 39% to SG$2.38 billion on higher demand, higher yields and lower full-year net fuel cost.

However, net profit plunged 57.4% year-on-year to SG$1.18 billion—mainly owing to Air India's losses and an accounting gain in the previous year. Air India recorded a loss of SG$3.56 billion, or $2.8 billion, far exceeding the $2.4 billion expected loss reported by Bloomberg in April.

SIA's CEO Goh Choon Phong said at an earnings briefing Friday that SIA will continue to support Air India, which he said had made 'tangible progress' in its transformation program, in areas like staff training and reduced customer complaints. 'It is going to be a long game. There is no shortcut,' he said.

Air India is seeking at least 100 billion rupees (S$1.47 billion) in financial support from SIA and Tata, according to a Bloomberg report in April. However, it may be hard to avoid given the magnitude of losses and continued operating pressure.