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Internatinal, May 1, 2025 : A potential closure of Pakistan’s airspace for one year could lead to losses of approximately $600 million for Indian airlines, with Air India being the hardest hit.
In response, Air India has sought compensation from the Indian government to offset the financial impact, according to a letter sent to the government, as reported by Reuters.
The development follows heightened tensions between India and Pakistan after a terrorist attack in Jammu and Kashmir last week, which claimed 26 lives, including 25 Indians. India’s Narendra Modi government has threatened stringent measures, including the cancellation of agreements with Pakistan. In retaliation, Pakistan has warned it may restrict Indian airlines from using its airspace.
Such a move would force Indian carriers to take longer routes, significantly increasing fuel costs and flight durations. In its letter dated April 27, Air India outlined the potential economic impact, estimating annual losses exceeding 50 billion Indian rupees ($591 million). The airline proposed a “subsidy model” to mitigate the financial strain, particularly for international flights affected by the airspace closure.
The letter stated, “Subsidies for impacted international flights are a fair, verifiable, and viable option. These can be withdrawn once the situation improves.” Air India highlighted that the closure would lead to increased fuel consumption, additional crew requirements, and operational inefficiencies.
Neither Air India nor India’s Civil Aviation Ministry provided comments when approached by Reuters. However, a source familiar with the matter revealed that the government had asked Air India’s executives to assess the impact of the potential airspace restrictions.
Three other sources informed Reuters that the Indian government is exploring alternatives to minimize losses for the aviation industry. These include negotiations with Chinese authorities for specific overflight clearances and potential tax exemptions. Indian airlines have also held meetings with the Civil Aviation Ministry to explore solutions, such as operating flights over challenging terrains near China.
Air India’s letter also urged the government to secure overflight permissions from Chinese authorities and requested approval to carry additional pilots for longer flights to the US and Canada to manage extended travel times.
As tensions between India and Pakistan persist, the Indian aviation sector braces for significant operational and financial challenges if Pakistan follows through on its threat to close.
AI/MR
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