Air India may Face $600m Loss from Pakistan Airspace Ban: Report
Air India is expecting the additional financial burden of about $600 million if Pakistan's airspace is closed to Indian flights for one year, leading the airline to file a claim for damages from the central government, according to a letter obtained by Reuters. The closure of airspace, which followed a terrorist attack in Pahalgam, Kashmir, that resulted in the deaths of 26 individuals, including a foreign national from Nepal, has led Indian airlines to brace for higher fuel costs and longer flight durations.
On Sunday, Air India officially sought a 'subsidy model' from the Indian government to mitigate the financial impact, pegging losses at over 50 billion Indian rupees (some $591 million) per year while the airspace ban is effective. The letter, which has been seen by Reuters, read, "Subsidy for impacted international flights is a good, verifiable and equitable choice. the subsidy can be withdrawn once the situation gets better." It added that Air India is specifically affected by the closure of airspace because of the additional fuel burnt and crew needed.
This letter was in response to a government official request for Air India managers to evaluate the impact of airspace closure on Indian carriers. The Tata Group-owned carrier is already undergoing a multi-billion dollar overhaul following its conversion to state ownership but is suffering from growth setbacks owing to delivery delays of Boeing and Airbus planes. In the 2023-2024 fiscal year, Air India incurred a net loss of $520 million, while revenues were at $4.6 billion.
With a market share of 26.5% in India, Air India has routes to the United States, Canada, and Europe, frequently crossing Pakistan's airspace. Air India has far more long-haul routes than its domestic competitor, IndiGo. Data from Cirium Ascend show that IndiGo, Air India, and Air India Express scheduled in April nearly 1,200 flights from New Delhi to Europe, North America, and the Middle East.
India is now looking for measures to contain its effects on the aviation industry due to the airspace closure. A source told one publication that the Indian carriers are meeting with the civil aviation ministry to map alternate routes, such as flying over difficult terrain alongside China, along with available relief from tax schemes. Air India's letter also asked the government to provide help in negotiating certain overflight clearances with Chinese officials and approval for assigning more pilots on routes to the United States and Canada to deal with the extended travel times.
