NEW DELHI: Air India may incur losses of up to $600 million annually if Pakistan’s closure of its airspace to Indian carriers persists, according to a company letter obtained by Reuters. The airline has formally requested compensation from the central government to offset the financial impact.
The restriction follows a deadly terror attack in Kashmir’s Pahalgam last week that killed 26 people, including a Nepalese national. As a result, Indian airlines are bracing for longer flight durations and higher fuel costs due to rerouting.
In a letter submitted on Sunday, Air India proposed a “subsidy model” to the Ministry of Civil Aviation, estimating financial losses exceeding ₹50 billion ($591 million) a year. “Subsidy for affected international flights is a good, verifiable and fair option… the subsidy can be removed when the situation improves,” the letter noted. The airline emphasized that it is the most affected carrier due to increased fuel burn and additional crew requirements caused by longer routes.
The letter was submitted after the government asked Indian airlines to assess the operational impact of the ban. Owned by the Tata Group and currently undergoing a multi-billion-dollar restructuring plan, Air India is also facing delivery delays from Boeing and Airbus, further constraining its growth.
In FY 2023–24, the airline posted a net loss of $520 million on revenues of $4.6 billion. With a 26.5% share of India’s aviation market, Air India operates numerous long-haul flights to Europe, North America, and the Middle East—routes that traditionally pass through Pakistani airspace. This exposure places it at a disadvantage compared to domestic rivals like IndiGo.
According to Cirium Ascend data, Air India, IndiGo, and Air India Express collectively scheduled around 1,200 international flights from New Delhi to Europe, the Middle East, and North America in April.
To mitigate the disruption, the Indian government is considering several alternatives. These include rerouting flights over Chinese airspace and offering tax relief to airlines. Air India’s letter also requested the government to engage with Chinese authorities to secure necessary overflight permissions and sought approval for deploying additional pilots on extended U.S. and Canada routes.
