Air India stares at $600 million additional costs due to Pakistan's airspace ban, seeks govt relief: Report

In wake of the closure of Pakistani airspace to Indian carriers, Air India has informed the central government that it could incur over $600 million in additional costs if the ban continues for a year – and has sought compensation to offset the financial blow, reports Reuters citing a company letter.

The national carrier, already grappling with high operational expenses and ambitious fleet expansion plans, has raised alarm over spiralling fuel bills, increased flight times, and operational rerouting, especially on key Western and US-bound routes.

As per the report, Air India on April 27 asked the central government for a "subsidy model" proportionate to the economic hit, estimating a loss of more than Rs 50 billion ($591 million) for each year the ban lasts, according to a letter sent by the airline to the Civil Aviation Ministry.

Air India's letter was sent after the government asked its executives to assess the impact of the airspace ban on Indian carriers, as per a source with direct knowledge of the matter, as quoted by Reuters.

The Tata Group-owned airline is in the midst of a multi-billion dollar turnaround after a period of government ownership, and growth is already constrained by jet delivery delays from Boeing and Airbus. It reported a net loss of $520 million in fiscal 2023-2024, on sales of $4.6 billion.

Air India, which has a 26.5% market share in India, flies to Europe, the United States and Canada, often crossing Pakistan's airspace. It operates many more long-haul routes than bigger domestic rival IndiGo.

Data from Cirium Ascend shows IndiGo, Air India and its budget unit Air India Express had roughly 1,200 flights combined from New Delhi scheduled for Europe, the Middle East and North America in April.