Air India may face $600m loss from Pakistan airspace ban, mulls China route: Report

NEW DELHI: Due to Pakistan's closure of its airspace to Indian carriers, Air India anticipates additional expenses of approximately $600 million if Pakistan's airspace restriction continues for a year, and has requested compensation from the central government, according to a company letter obtained by Reuters.
Indian airlines are preparing for increased fuel expenses and extended flight durations due to Pakistan's closure of airspace following a terror attack on tourists in Kashmir's Pahalgam last week that killed 26 including a foreign national from Nepal.
On Sunday, Air India reportedly submitted a request to the Indian government for a 'subsidy model' corresponding to the financial impact, calculating losses exceeding 50 billion Indian rupees ($591 million) annually whilst the restriction remains in effect, as per Reuters, that claims to have viewed the letter sent to the civil aviation ministry.
"Subsidy for affected international flights is a good, verifiable and fair option ... the subsidy can be removed when the situation improves," the letter stated. "The impact on Air India is maximum due to airspace closure, due to additional fuel burn...additional crew."
The correspondence was issued after government officials requested Air India executives to evaluate the consequences of the airspace restriction on Indian carriers, according to a Reuters source. The Tata Group-owned carrier, currently implementing a multi-billion dollar restructuring following state ownership, faces growth limitations due to delayed aircraft deliveries from Boeing and Airbus.
The airline recorded a net loss of $520 million in fiscal 2023-2024, with revenues of $4.6 billion.
Air India, holding 26.5% market share in India, services routes to Europe, the United States and Canada, frequently utilising Pakistan's airspace. The airline operates significantly more long-distance routes compared to its domestic competitor IndiGo.
According to Cirium Ascend data, IndiGo, Air India and Air India Express collectively scheduled approximately 1,200 flights from New Delhi to Europe, the Middle East and North America in April.
India is exploring solutions to minimise the impact on the aviation sector from Pakistan's airspace closure. One Reuters source indicated that Indian carriers consulted with the civil aviation ministry to develop alternatives, including routes over challenging terrain near China and potential tax relief measures.
Air India's letter requested government intervention with Chinese authorities regarding specific overflight permissions, without providing details. Additionally, it sought approval for deploying extra pilots on United States and Canada routes to accommodate increased journey times.