Air India weighs merger with Air India Express

Air India's incoming chief executive, Tewolde Gebremariam, is considering merging its low-cost unit, Air India Express, with the parent airline as part of efforts to reduce costs, Bloomberg reported on Friday, citing people familiar with the matter.

According to the report, Gebremariam has asked managers across departments why the group needs to operate two airlines with separate operating permits. Bloomberg said he believes a single airline would face fewer regulatory requirements and require fewer duplicate teams of managers, engineers and administrative staff.

The idea is at an early stage, Bloomberg said. Any merger would require approval from Air India's supervisory board. Air India Express would retain its brand if the two airlines were combined, according to the report.

The people cited by Bloomberg did not speak publicly because the discussions are private. The report has not been confirmed by Air India or its owner, the Tata Group, and no decision has been announced.

Bloomberg said the new chief executive also must deal with the closure of Pakistani airspace to Indian carriers and a conflict in the Middle East that has disrupted travel and driven up fuel costs.

Air India has undergone consolidation before. It merged with Indian Airlines in 2007, Bloomberg noted. The group's airlines were later consolidated into two brands, Air India and Air India Express.

Gebremariam, a former chief executive of Ethiopian Airlines, joined the company this month. His formal appointment remains subject to final regulatory clearance because he is a foreign national, Business Today reported.