Singapore Airlines is still committed after Air India’s record loss, so what is it really after?

In Brief: Singapore Airlines has been trying to get inside Indian aviation since 1994. It finally has the vehicle. While Air India's record loss and Singapore Airlines' resulting profit decline have produced a wave of commentary declaring a wrong bet, that misses thirty years of context, a fleet transformation that is structurally incomplete, and a network pivot that is already underway. The real question is whether this is a timing problem or a strategic failure, and for anyone with capital exposure to Air India, that distinction matters. This piece examines what SIA was really after, what the numbers show, what the return on investment actually looks like, and what would have to be true for the pessimists to be right.

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Singapore Airlines owns 25.1% of Air India. Its own net profit fell 57% to S$1,180M in FY26. The filing names Air India's record loss as the main reason. The goodwill SIA recorded on the acquisition still sits at S$1,391.5M, triggering impairment indicators.

The headlines so far have reported and columned that Singapore Airlines (SIA) made a bad bet. Air India is shrinking instead of transforming. In May 2026, Air India further announced it was cutting 145 weekly international flights between June and August. That is a 27% reduction in international capacity. North America took the worst of it, down 39%. Air India further announced a 22% cut in domestic capacity.  

Tata and SIA are now being asked to put in another S$1.47 billion, on top of the original commitment. The new money request arrives before the old money has produced anything

That read effectively misses what SIA actually bought. While the losses and capacity cuts are real, the capacity cuts came from fuel prices and airspace closures due to geopolitical developments, and every Indian carrier has cut routes this summer for the same reasons. The transformation has slipped behind schedule rather than fallen apart. SIA did not invest based in Air India’s FY26 income statement. They rather bought the only direct equity path into India’s aviation market, after trying since 1994. Staying in is the position that fits the reason SIA wrote the cheque in the first place. They effectively bought into one of the largest domestic aviation markets that no foreign carrier has been able to pull off and that the cost of exiting could be substantial.

 

 

 

 

 

 

 

 

Why SIA’s 1994 Connection Matters for the Investment

Tata and SIA have been trying to build an airline together since 1994. Regulations blocked them and in 2000, they bid jointly for 40% of Air India. The privatisation collapsed and in 2013, they incorporated TATA SIA Airlines and launched Vistara in 2015. Between 2015 and 2022, both partners put around ₹9,900 crore into Vistara, even though it never really turned into profit.

Vistara also never had the fleet to matter. It flew six Boeing 787s, against Emirates with 261 widebodies and Qatar with 200, which wasn’t a serious challenge for any long haul corridor out of India. SIA could keep funding Vistara forever and Vistara would still not move the needle on Gulf-India and the westbound dominance. Air India was the Indian carrier with a fleet base big enough to compete even if that base needed rebuilding. That is the reason the merger happened. Vistara was the right product with world-class service standards built, while Air India had the widebody scale, slots and legacy recall value.

When Tata bought Air India from the government in January 2022, SIA did not participate and was absorbing Covid losses and could not justify the cheque at the time. The merger structure is what is on public record.

Figure 1. Tata–SIA capital deployment into Indian aviation, 1994 to 2026. Cumulative commitment in ₹ crore alongside milestone phases; the May 2026 request remains under negotiation. Source: Aeraltus analysis from public filings.

The funding trail tells how the partners treat the project. They funded the same Indian aviation thesis through three regulatory regimes, two failed attempts and one airline built from scratch that was still making losses during most of the tenure, because the prize at the end was always Air India. Not just the brand, but its westbound long-haul routes, which the Gulf carriers have steadily captured.

When SIA took 25.1% of Air India in November 2022, it paid S$1,921.3M for net assets worth S$529.8M. The S$1,391.5M gap was recorded as goodwill, which was bought from SIA's position recorded in the filing as "the fast-growing Indian aviation market that complements the Singapore hub".

Figure 2. Air India acquisition accounting waterfall (S$M). Purchase-price allocation showing S$1,391.5M of goodwill against S$529.8M of net identifiable assets, representing roughly 2.6x the underlying asset base. Source: SIA condensed interim financial statements, 1H FY2025/26, Note 15.

That premium was paid for three things the balance sheet couldn’t capture. Those were India’s domestic traffic rights no foreign could hold; The domestic network depth, which no foreign airline can build from outside and the long-haul order book, which gives Air india the only Indian widebody platform of meaningful scale. That premium will only recover if widebodies are retrofitted, arrived and fly enough to be seriously competitive to justify yield assumptions and reverse loyalty from incumbent competition.

The Air India stake fits a portfolio logic SIA has pursued since 2011, taking minority positions in growth market carriers that feed Changi traffic and extend SIA's network reach beyond what Singapore's geography allows. Virgin Australia served the same function on the Kangaroo route until its collapse in 2020. The difference with Air India is operational depth. SIA has seconded personnel into flight operations, engineering and maintenance in a way it never did with Virgin. The portfolio thesis is not new. The degree of commitment is.

Ratan Tata himself said in the 1990s: "We don't need Singapore Airlines to help us run an airline. But if we decide that we want to run a world-class airline, then we need them." Those long haul routes to Europe, UK, Canada and USA were effectively where the market for a “world-class airline” was still there. Today that gap has been effectively dominated by Emirates, Qatar, and Etihad through hub connections, but still starved of a direct non-stop competitor. The domestic and short haul international sectors from the hubs were effectively dominated by price-sensitive travellers who would choose budget options like IndiGo, so Air India’s A320s, A321s and Air India Express (post merger with AirAsia India) were built as feeder carriers to fly routes that have heavy competition with IndiGo that would provide the volume for the long haul sectors. While it’s been widely reported that their years of losses stemming from India’s fare regulations, Route dispersal guidelines, taxes and the notoriously price-sensitive demand, these losses would be effectively cross-subsidised by the profits from the long haul sectors.

SIA’s Profit and Air India’s Loss Broken Down

The 57% profit fall is a comparison artefact. FY2024/25 was inflated by a S$1,098M one-off gain on the Vistara disposal. When that is removed, the underlying FY24/25 number is around S$1,680M, and FY25/26 came in at S$1,180M, resulting in a like-for-like profit decline of about 30%.

Figure 3. SIA reported net profit by financial year, FY2019/20 to FY2025/26 (1H). Adjusted underlying point for FY24/25 strips out the S$1,098M Vistara disposal gain, putting the like-for-like decline closer to 30%. Source: SIA annual results filings; SIA 1H FY2025/26 interim financial statements.

The mechanism is that SIA started equity accounting for Air India from December 2024. FY24/25 caught only four months of Air India’s losses. FY25/26 catches the full twelve. SIA’s book just started showing all of its losses in one go, resulting in the accounting calendar catching up to its cost base. This is likely to happen at 2027-2028 depending on when those widebodies arrive to be able to fly lucrative long haul routes that can offset the current losses.

The Delhi Dependency and What's Already Shifting

The long haul sector, that was supposed to be the profitable sector, has been severely impacted by Pakistan’s airspace ban since 2025, and subsequently Iran’s airspace blockade. But that impact was also severe because Air India has built its international network around Delhi. The original transformation followed the logic where Delhi is the hub with widebody capacity radiating outward from a single major gateway. That made strategic sense when the routing assumption held.

But now these airspace restrictions have led to Air India’s UK, Continental Europe and North American flights from Delhi carrying a routing penalty of 60-90 minutes to, effectively reducing the competitive advantage it had by flying direct flights and losing market share to European and North American incumbents. This is the base for 39% cuts to North America. Additional factors also include the 2025 Ahmedabad crash that resulted in the loss of 260 lives. This affected the insurance premiums for the Boeing 787s that are a major part of their fleet. The insurance impact is another component of the FY26 loss that Air India has not broken out, which is part of why the disaggregation question matters. Without that breakdown, no shareholder can tell how much of the ₹22,000 crore is fuel, airspace, retrofit drag, integration cost or a one-off insurance step-up that does not repeat at the same scale. While the ₹22,000 crore loss has not been disaggregated, the more accurate read is that the forced acceleration of something that was already necessary. Air India cannot sustain a single-hub long haul model in a region with recurring airspace disruption risk. Pakistan closed in 2019, reopened, then closed again. Iran tightens periodically.

The evidence that Air India is already moving on this is in the summer 2026 schedule. Retrofitted Boeing 787s are being deployed on the Bengaluru-London Heathrow route from August 2026, introducing Premium Economy and their new flagship business suits for the first time. Mumbai-Heathrow gets upgraded in the same window with new B787-9s and retrofitted B787-8s, replacing the ex-Etihad B777-300ERs. Air India Express is simultaneously consolidating domestic network around Bengaluru as the primary hub. More than cosmetic product upgradesm they’re widebody capacity being anchored outside Delhi on long-haul routes that don’t carry the same westbound routing penalty.

Therefore, as more retrofitted widebodies and new bespoke widebodies enter into service, the question worth watching is whether the network expansion stays centred around Delhi or whether Bengaluru and Mumbai absordb a structurally larger share of the long haul programme. Navi Mumbai, which became operational in December 2025, adds a further variable. If slot conditions develop favourably, Mumbai’s western hub role potentially strengthens beyond what the current Heathrow upgrade suggests. That remains to be confirmed from public scheduling data.

The Widebody Bet and why it’s dragging delays

SIA’s thesis rests on Air India running a credible long-haul carrier. Long haul is the only sector that commands the premium Air India can venture into. Singapore Airlines is buying into especially the westbound demand from India. They can’t fly those Indian passengers via its Changgi hub. At most, it can fly South West Pacific or East Coast North America.

Figure 4. Widebody fleet comparison — active aircraft and units on order. SIA and Air India combined will operate 296 widebodies in service or on order through the decade; Emirates alone is heading to 622, and Qatar to 445. Source: Aeraltus primary tracking from Flightradar24, SeatGuru and carrier delivery reports (Feb 2026).

Air India flies around 60 widebodies today. Emirates flies 261 widebodies at 185 weekly flights to India alone. Qatar Airways flies around 200 widebodies, Cathay Pacific flies 143. Air India has 72 widebodies on order,18 Boeing 787-9s, 10 Boeing 777-9s, and 44 A350s. But 511 of the 570 aircraft Air India has ordered are still undelivered. Only four more of the six widebodies are due in 2026.

That is the aircraft delays and supply chain delays affecting the seats. When Air India announced in August 2023 its new logo, it also announced a $400M cabin retrofit of its aircraft that included 1-2-1 suite-like business class seats, premium economy and a new economy on its 26 Boeing 787-8s as well as a first class on its 13 B777-300ERs. These would effectively replace the worn-down dated interiors and poorly managed seats. That retrofit was initially announced to be completed by 2025, effectively allowing Air India to be able generate revenue from the new premium seats that could have pulled loyalty from incumbent hub carriers. However, as of May 2026 Air India has so far only received 2 retrofitted Boeing 787-8, along with new deliveries of 2 bespoke Boeing 787-9s. Additionally, during the record order announcement, Airbus announced that the Airbus A350-1000s were to start deliveries in mid-2025. So far none have arrived. Along with manufacturing delays, supply chain issues that include certification of the seats have also been delayed. Air India’s bespoke B787-9s and 6 A350s with the premium interiors and seats are currently deployed on their flagship Frankfurt, New York and London routes. Their remaining long haul routes still have the old interiors.

Therefore, seeing the prize being the lucrative long haul sectors, SIA is effectively taking a share in it and the thesis of their investment remains delayed instead of a mistake. Changgi’s hub cannot capture the growing Indian traffic that flies to Europe and most of North America. At most, it has been able to capture the Indian connecting traffic to some of its Asia-Pacific routes, Australia, New Zealand and west coast North America routes. But with Emirates, Etihad and Qatar capturing the lucrative South Asia-Europe and North America corridor, SIA needed to take a share, which could only be through a direct non-stop Indian carrier that could execute it.

Why the S$1.47B Request Is Really About Operational Influence

When the Air India merger was announced in 2022, Singapore Airlines committed up to S$880M (US$250M upfront plus an envelope of up to US$615M). That phase is now complete and Air India and the Tata Group are now asking shareholders for another S$1.47B. The obvious question is what does SIA get from the next cheque that it did not get from the first one?

That answer starts with India’s foreign ownership rules. No foreign airline can own more than 49% of an Indian carrier. SIA already holds 25.1% of Air India. Even if it invested far more capital, it could still not take control of the airline. That effectively changes the logic of the investment. Beyond a certain point, more money does not buy more ownership or voting power. Financially, that makes additional investment harder to justify on equity returns alone.

Therefore, this stops being just a funding discussion and becomes a negotiation over influence. SIA cannot buy control of Air India through equity, but it can push for greater operational involvement: network planning, commercial strategy, fleet deployment, premium service standards, or the integration of the joint business agreement.

That is likely what Goh Choon Phong was signalling in May 2026 when he described the capital request as a “discussion with fellow shareholders”. He neither committed nor rejected the proposal.

Simply put, the S$1.47B request is not just about funding losses, but potentially the price of giving Singapore Airlines a larger operational role in shaping Air India’s turnaround. SIA cannot own more of Air India, but can influence more of how the airline is run. Under Singapore tax rules, gains on share disposals are exempt if the holding exceeds 20% for a continuous 24-month period, which is a structural feature that raises the financial cost of exit and reinforces the holding logic independent of strategic intent. And that has effectively been shown with recent reports of Singapore Airlines sending more executives to Air India.  

What a Return on Investment Actually Looks Like

The real return on investment runs through three reinforcing components that the carrying value of S$891M does not capture, and that only materialise once the fleet transformation completes.

1.     The first is yield recovery. As the retrofitted and bespoke widebodies fill Frankfurt, London and New York, Air India's premium product reaches parity with the Gulf carriers. Premium economy and flat-bed business class start commanding the yields that have flowed to Emirates, Qatar and Etihad for a decade. That yield is the only sector revenue large enough to absorb the structural losses Indian regulations impose on the domestic market. The narrowbody fleet flying as feeders into Delhi, Mumbai and Bengaluru only produces a system return if those flights are funnelling traffic into long-haul services earning enough to cover the deficit. The widebody yield is the engine. The narrowbody network is the throughput.

2.     The second is the loyalty switch. Once the product is consistently good across the long-haul fleet, repeat passengers stop defaulting to a Gulf hub connection and corporate travel programmes start writing Air India into their preferred routings. Recurring revenue of that kind is harder to win and harder to lose once won. That is what eventually validates the premium SIA paid in 2022.

3.   The third is the Changi feed value, which Air India's books never show. Singapore Airlines’ long-haul services to Australia, New Zealand and west-coast North America generate connecting traffic feeding Singapore through the joint business agreement while reciprocally allowing feed to Air India’s westbound network to Europe, Africa, Middle East and most of North America, once regulatory approval lands in both capitals. That feed value sits in SIA's results, and it is the portion of the return that the carrying value will never reflect.

What Would have to be True for the Investment to not Materialise

Here are four conditions that matter whether SIA’s return on investment from Air India will be achieved or not.

1.     Does the FY2026 loss turn out to be structural rather than transitional? If yes, the timeline has been broken instead of stretched. A loss made of integration costs from the merger with Vistara, fleet underutilisation and one-off restructuring (as seen in the massive cuts) is fixable once the deliveries arrive. A loss made of yield weakness on the long-haul network is unfixable by capital alone. Air India has not disaggregated the ₹22,000 Crore loss.

2.     If IndiGo’s A350 entry from 2028 captures the long-haul demand before Air India’s widebodies arrive, Air India’s competitive position narrows in the window that matters most. IndiGo has 60 A350s on firm order. It introduced “Stretch” as a Business class in 2024. It is building a long-haul product. The window for Air India to land its widebody growth ahead of IndiGo’s intake runs two to three years. If that window closes, SIA ends up holding a stake in a long haul carrier that can only focus on niche premium routes and becomes a second-place long haul carrier in India instead of leading that segment

3.     If the commercial framework signed in January 2026 does not convert to a binding joint business agreement or joint venture with regulatory approval in both Singapore and Delhi within two years, the network synergy story stays theoretical. A framework that produces no schedule coordination, no revenue sharing, no joint pricing and no joint sales channels to capture benefit from each other’s corporate customer pool is worth less than the premium SIA paid

4.     If widebody deliveries slip past 2028, the equity accounting drag on SIA’s results continues past what the investment case was built to absorb. Boeing 777X timeline, and remaining Boeing 787 and Airbus A350 deliveries as well as the retrofits of widebodies control this variable. Air India and SIA can only hold this position and wait.

As of May 2026, none of these has triggered. The FY2026 loss is large but its composition is unverified. IndiGo’s widebodies are ordered but currently being tested through a wet lease mechanism. The cooperation framework is signed and a joint venture is yet to be announced. Deliveries are slow but still scheduled. The thesis has held under stress even if every variable around it has tightened.

From a portfolio management perspective the commitment logic is this. SIA is holding Air India because the cost of exit, which is operational, relational, and financial, exceeds the cost of continued commitment at this stage of the transformation. The Virgin Australia stake, which SIA held passively and lost entirely in 2020, is the instructive contrast. Air India is an active holding, instead of a passive one. SIA has seconded personnel into flight operations and engineering, signed a joint business agreement framework, and structured a capital commitment with tranches tied to Air India's business plan progress. Unwinding that is a strategic retreat from the Indian market SIA has been trying to enter since 1994, rather than a simple share sale. The portfolio logic is that the position is worth defending until the transformation produces the asset SIA originally underwrote, even if Air India is not a good investment today.

Closing Thoughts

SIA’s filings have not softened on Air India. The stake is still described as a “core component of its long term multi hub strategy” and a “direct stake in one of the world’s largest and fastest growing markets”. The language still sits in the same filing that disclosed a 57.4% profit drop and the impairment indicator.

SIA is effectively telling its shareholders that the pain is understood, but the thesis is intact and the answer is to keep going. The carriers that will define the next decade of long-haul growth are the ones holding positions in Asia-Pacific. Emirates and Qatar built theirs over thirty years with Qatar eventually having a stake in Cathay Pacific. SIA built Changgi into one of the world’s most connected transfer hubs. The missing piece in SIA’s network is a domestic Indian carrier that flies direct long haul routes to Europe, North America and Africa without bypassing it through Dubai or Doha. Changgi’s geographical limitations limit Singapore Airlines from capturing that demand and hence SIA investing is being a credible player, combined with TATA’s institutional and reputational advantages in building an Indian carrier that’s capable of doing that.

SIA is accepting nearly S$900M already tied up in Air India, the possibility of another S$1.47B in future investment and weaker earnings for the next one or two years in order to stay involved in Air India’s turnaround.

SIA's return is a function of Air India's yield recovery on long-haul routes and the traffic feed value to Changi, neither of which is captured in the current carrying value.

The real test is simple: by 2029-30 has Air India become a credible long-haul airline with a functioning widebody fleet, a meaningful partnership with SIA, and a premium product strong enough to compete seriously with Gulf carriers? If yes, the investment was worth it. If not, it wasn’t. Right now Singapore Airlines is betting that the answer will be yes. The FY2026 are still too early to prove either side is right.

Author's Note and About Aeraltus

This analysis is based on public information such as listed filings, reports. The open questions are genuine and not rhetorical. Aeraltus does not hold a position in Singapore Airlines, Air India or any related entity.

Aeraltus produces structural aviation analysis and intelligence on emerging markets across Indian subcontinent, ASEAN and Africa. Custom aviation analysis is available for aviation industry professionals that include institutional investors, airline strategy teams, lessors and corporate development groups. If you want a tailored read on a specific carrier, route system, fleet decision or deal, using data that can’t be discussed publicly, Aeraltus runs bespoke engagements alongside the published work. Contact info@aeraltus.com.

Sources

Primary filings and direct disclosures:

Singapore Airlines Group — Condensed Interim Financial Statements, 1H FY2025/26 (April to September 2025). Published 13 November 2025. Note 15 (Air India acquisition accounting); Group income statement; p.32 (equity accounting disclosure). Direct filing.

Singapore Airlines Group — Full Year Results FY2025/26 (April 2025 to March 2026). Announced May 2026. Net profit S$1,180 million; 57.4% YoY decline. SIA investor relations.

Singapore Airlines Group — Q3 FY2025/26 Results Briefing (October to December 2025). Published February 2026. Commercial operational framework with Air India disclosed. Engine Cowl / SIA results briefing.

Singapore Airlines — Merger Announcement, November 2022. CEO Goh Choon Phong statement on Air India transformation programme. SIA press release.

Third-party financial and aviation reporting:

Bloomberg. "Singapore Airlines Asked to Put In More Money Into Air India." April 2026. S$1.47 billion capital request reported.

CNBC. Interview with SIA CEO Goh Choon Phong. May 2026. Capital injection response: "will be a discussion with fellow shareholders."

Aviation Outlook (Substack). SIA FY2024/25 and FY2025/26 strategic report. Full-year net profit figures and underlying analysis.

Engine Cowl. Q3 FY2025/26 SIA results coverage. Commercial framework disclosure and quarterly profit reporting.

Business Standard. December 2022. Vistara cumulative capital injection documentation (~₹9,900 crore across both partners 2015 to 2022); final ₹650 crore injection 13 days before merger announcement.

Gulf News. SIA merger announcement coverage, November 2022. $250 million upfront commitment; up to $615 million total envelope.

Fleet and market data:

Simple Flying. Fleet reports for Emirates, Qatar Airways, Cathay Pacific, Singapore Airlines, Etihad, Air India. 2025 to 2026.

Flightradar24. Fleet tracking data. Air India widebody count.

IATA. India aviation market ranking and domestic passenger volume. 2025 to 2026.