Air India May Face $600Mn Loss If Pakistan Closes Airspace for a Year: Report

Air India expects to lose around $600 million if Pakistan keeps its airspace closed for a year and has asked the central government for help, according to a letter seen by Reuters.

Indian airlines are bracing for higher fuel costs and longer flight times after Pakistan shut its airspace. This move came after a recent terror attack in Kashmir’s Pahalgam that killed 26 people, including a tourist from Nepal.

On Sunday, Air India reportedly wrote to the government, asking for a subsidy to offset the losses. The airline estimated the financial hit could cross Rs 50,000 crore ($591 million) per year if the situation continues.

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"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."

Airlines like Air India, IndiGo, and SpiceJet have shared their concerns and suggestions with the Ministry of Civil Aviation about the impact of Pakistan closing its airspace after the April 22 terror attack in Pahalgam that killed 26 people, sources said.

The ministry recently met with the airlines to discuss the issue and is now reviewing the situation and exploring possible solutions. Pakistan closed its airspace to Indian airlines on April 24.

Tata Group-owned Air India, which is undergoing a major revamp after being taken over from the government, is facing growth challenges because of delays in getting new aircraft from Boeing and Airbus.

In the financial year 2023-24, the airline reported a net loss of $520 million on revenues of $4.6 billion.

India is looking for ways to reduce the impact of Pakistan’s airspace closure on its aviation sector. According to a Reuters source, Indian airlines discussed options with the civil aviation ministry, including flying over tough terrain near China and asking for possible tax relief.

In a letter, Air India asked the government to talk to Chinese authorities for certain overflight permissions and also requested approval to send more pilots on longer US and Canada routes due to extended flight times.

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