Pakistan Airspace Ban to Cost Air India $600 Million, Seeks Govt Aid: Report

The closure of Pakistan's airspace is expected to result in a loss of around $600 million for Air India over the next year, according to a Reuters report citing a letter from the airline. In the letter, Air India urged the government to provide compensation for the financial impact of the ban.

Indian airlines, including Air India, are bracing for higher fuel costs and longer flight durations after Pakistan's decision to close its airspace to Indian carriers. This move was reportedly a retaliatory measure following an attack on tourists in Pahalgam last week.

On April 27, Air India formally requested that the government introduce a "subsidy model" to offset the economic impact caused by the airspace closure. The airline estimated its losses could surpass 50 billion rupees (approximately $591 million) for each year the ban remains in effect.

In its letter to the civil aviation ministry, Air India proposed that subsidies for affected international flights would be a fair and verifiable solution, suggesting they could be removed when the situation improves. The airline explained that its losses were compounded by additional fuel consumption and the need for more crew due to the rerouting of flights.

While Air India declined to comment on the matter, the civil aviation ministry did not immediately respond to a request for feedback.

According to Reuters, the airline's request was made after the government instructed Air India to assess the financial implications of the airspace ban on Indian carriers.

Air India, now owned by the Tata Group, is undergoing a multi-billion-dollar turnaround after years of government ownership. However, the airline's growth has been hampered by delays in aircraft deliveries from Boeing and Airbus.

For fiscal 2023-2024, Air India reported a net loss of $520 million on sales of $4.6 billion. With a 26.5% market share in India, the airline operates many long-haul international routes, including flights to Europe, the United States, and Canada, often passing through Pakistani airspace.

Data from Cirium Ascend, also cited by Reuters, revealed that in April, Air India, its budget unit Air India Express, and IndiGo collectively had about 1,200 flights scheduled from New Delhi to Europe, the Middle East, and North America.

The government is reportedly exploring options to mitigate the economic fallout from Pakistan's airspace closure on the Indian airline industry, according to three sources familiar with the matter.