Air India is preparing to introduce a performance-linked stock option plan (PSOP) for its employees, as the airline sharpens its focus on profitability and long-term talent retention. The move comes nearly four years after its acquisition by the Tata Group and signals a shift towards performance-driven rewards.
The proposed plan will grant stock options to a wide pool of employees, including pilots, engineers, and senior leaders. These options can be exercised at a later stage, with pricing linked to either the face value or the prevailing market value at the time of grant. The proposal received shareholder approval earlier this year.
As part of the scheme, over 227 million stock options will be issued, representing a small fraction of the airline’s total equity. Employees will need to complete a defined vesting period—ranging from one to five years—before they can access these benefits, encouraging longer tenures within the organisation.
The structure of the plan ties rewards directly to performance outcomes. Employees may receive reduced benefits if internal targets are not fully met, reinforcing a pay-for-performance culture. The airline’s board-level committee will oversee eligibility, allocation, and pricing decisions.
The initiative also aligns with broader industry trends, where equity-linked compensation is becoming increasingly common, even beyond startups. Other carriers in India have already introduced similar schemes, reflecting a growing emphasis on aligning employee incentives with organisational growth.
This development comes at a time of transition for the airline, as it continues to streamline operations and strengthen its leadership structure. The introduction of stock-based rewards marks another step in its effort to build a more competitive and performance-oriented workforce.
