Air India's incoming chief executive, Tewolde Gebremariam, is considering merging its low-cost unit Air India Express into the parent airline as part of a push to cut 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 run two airlines with separate operating permits. Bloomberg said he believes a single airline would face fewer regulatory requirements and would need fewer duplicate teams of managers, engineers, and administrative staff.

Bloomberg said the idea is at an early stage. Any merger would need the approval of Air India's supervisory board. Air India Express would keep its brand if the two airlines were combined, the report said.

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 has to deal with the closure of Pakistani airspace to Indian carriers and a conflict in the Middle East that has disrupted travel and pushed up fuel costs.

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

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

Source: Bloomberg