New Delhi, Sept. 18 -- Air India Ltd.'s incoming CEO Tewolde Gebremariam is considering folding the no-frills Air India Express unit into the group as he tries to cut costs to counter record loss, according to people familiar with the matter.

In multiple meetings across departments, Tewolde quizzed managers about the need to run two airline companies with separate operating permits, said the people, who asked not to be identified as the talks were private. The CEO-designate argues that having a single airline group would lower regulatory requirements and reduce the need for two sets of managers, engineers, and administrative staff, the people said.

The idea of combining Air India and its budget carrier is at an early stage, and realisin...