Air India anticipates facing approximately $600 million in additional expenses if the ban on Pakistan’s airspace persists for a year, and has requested compensation from the federal government for this financial impact, as indicated in a company letter reviewed by Reuters.
Indian airlines are preparing for increased fuel costs and extended travel durations following Pakistan’s decision to close its airspace to the country’s carriers in a reciprocal action after an attack on tourists in Indian Illegally Occupied Jammu and Kashmir (IIOJK) last week.
On April 27, Air India appealed to the Indian government for a “subsidy model” proportional to the economic setback, estimating losses exceeding 50 billion Indian rupees ($591 million) for each year the ban remains in effect, according to a letter sent by the airline to the Civil Aviation Ministry, which was seen by Reuters.
The letter stated, “Subsidy for affected international flights is a good, verifiable and fair option … the subsidy can be removed when the situation improves.”
“The impact on Air India is maximum due to airspace closure, due to additional fuel burn…additional crew.”
Air India declined to provide any comments on the matter. The Civil Aviation Ministry of India has not yet responded to a request for comment.
A source with direct knowledge of the situation mentioned that Air India’s letter was dispatched after the government instructed its executives to evaluate the consequences of the airspace ban on Indian carriers.
The Tata Group-owned airline is currently undergoing a multibillion-dollar turnaround after a period under government ownership, and its growth is already hampered by delays in jet deliveries from Boeing and Airbus. The airline reported a net loss of $520 million in fiscal year 2023-2024, with sales amounting to $4.6 billion.
Air India, holding a 26.5% market share in India, operates flights to Europe, the United States, and Canada, frequently traversing Pakistani airspace. It manages a significantly larger number of long-haul routes compared to its primary domestic competitor, IndiGo.
Data from Cirium Ascend reveals that IndiGo, Air India, and its budget subsidiary Air India Express had approximately 1,200 combined flights scheduled from New Delhi to Europe, the Middle East, and North America in April.
Three other individuals familiar with the matter indicated that the Indian government is exploring various options to mitigate the impact of Pakistan’s airspace closure on the airline industry.
One of the sources mentioned that Indian carriers met with the Civil Aviation Ministry to discuss potential solutions, including rerouting flights over challenging terrain closer to China and considering some tax exemptions.
In its letter, Air India requested the government to engage with Chinese authorities to secure certain overflight clearances, without providing specific details.
The airline also sought the government’s approval to carry additional pilots on flights to the United States and Canada to accommodate the longer travel times resulting from the airspace closure.
