N. Chandrasekaran’s decision to step down as chairman of Tata Sons has opened a new chapter for India’s largest business conglomerate. Amid the leadership transition, one of the group’s most closely watched businesses will be Air India, which remains at the centre of Tata’s ambitious but costly expansion strategy.

A critical transition for Air India

Mr. Chandrasekaran, who has led Tata Sons since 2017, will step down after his current term ends in February 2027. His decision comes at a crucial time for the conglomerate, with the potential listing of Tata Sons, geopolitical uncertainties and mounting losses across several of its businesses.

The timing is particularly significant for Air India. The airline is undergoing an expensive transformation following the Tata Group’s acquisition of the carrier in 2022, with Mr. Chandrasekaran playing a central role in shaping its revival strategy.

His tenure saw major structural changes in Tata’s aviation business, most notably the merger of Air India and Vistara. But the transformation has also exposed the group to substantial financial risks.

Rising losses

Air India and Air India Express together reported a ₹22,238 crore loss in FY26, highlighting the scale of the financial challenge facing the group’s aviation ambitions.

In his message to shareholders, Mr. Chandrasekaran described FY26 as the airline’s “most challenging year” since Tata acquired Air India. The group’s annual report also indicated that the airline’s transformation would take considerably longer than initially anticipated.

Air India’s losses have also added to the pressure on Tata Sons’ portfolio of newer businesses, contributing significantly to the group’s higher aggregate losses during FY26.

The airline’s capital-intensive expansion has reportedly raised concerns among Tata Trusts, with disagreements emerging over the group’s wider investment commitments and the pace at which capital is being deployed.

Leadership uncertainty

The leadership transition at Tata Sons comes as Air India itself faces a change at the top. Chief Executive Officer Campbell Wilson is preparing to leave; Tewolde Gebremariam is the CEO-designate and Managing Director of Air India, appointed on August 5, 2026.

The simultaneous changes could make the next phase of Air India’s turnaround particularly challenging. The new Tata Sons chairman will have to determine how aggressively to continue investing in the airline while addressing concerns over profitability, operational performance and capital allocation.

Technical problems add to the pressure

Operational reliability is another concern for Air India as it attempts to rebuild its position as a global carrier.

The government said on August 3 that 352 significant technical defects had been reported across domestic and international flight operations during the year through June. Of these, 46 involved Air India flights, while 53 were linked to Air India Express and 152 to Akasa Air.

The figures put Air India’s operational performance under additional scrutiny at a time when the airline is investing heavily in fleet renewal, technology and infrastructure.

The Tata Group has reportedly committed nearly $400 million to modernising the fleet and upgrading technology. The airline’s success is therefore important not only for Tata but also for India’s ambitions to develop a stronger global aviation hub.

A crucial test for Tata

The Sir Dorabji Tata Trust, which owns a 27.9% stake in Tata Sons, has accepted Mr. Chandrasekaran’s resignation and initiated the process of finding his successor. However, the succession process now faces a governance hurdle, with the Sir Ratan Tata Trust (SRTT) currently restricted by the Maharashtra Charity Commissioner from convening trustee meetings or taking key decisions. The issue is significant because Tata Sons’ Articles of Association require both the Sir Dorabji Tata Trust (SDTT) and the Sir Ratan Tata Trust to participate in selecting the group’s next chairman.

The succession process, therefore, is not merely about finding Mr. Chandrasekaran’s replacement. It could determine the direction of the Tata Group’s next phase.