Leading Indian carrier Air India reportedly expects to face around $600 million in additional costs if a ban from Pakistan’s airspace lasts for a year. The airline is also seeking the Indian government’s help to compensate it for the hit.
Air India’s move comes amidst Indian airlines bracing for higher fuel costs and longer journey times after Pakistan shut its airspace to the South Asian country’s carriers in a tit-for-tat retaliation following an attack on tourists in Kashmir last week.
Air India on April 27 asked the Indian government for a “subsidy model” proportionate to the economic hit, estimating a loss of more than 50 billion Indian rupees ($591 million) for each year the ban lasts, Reuters reported, citing a letter sent by the airline to India’s Civil Aviation Ministry.
Air India seeks compensation
“Subsidy for affected international flights is a good, verifiable and fair option … the subsidy can be removed when the situation improves,” the letter said, which Reuters said it has seen.
“The impact on Air India is maximum due to airspace closure, due to additional fuel burn…additional crew,” the Air India missive said.
Reuters said Air India declined to comment on the issue, and India’s Civil Aviation Ministry did not immediately respond to its request for comment.
Air India, which has a 26.5 per cent 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 its bigger domestic rival IndiGo.
The airline’s letter was reportedly sent after the government asked its executives to assess the impact of the airspace ban on Indian carriers.
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.
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.
The Indian government is considering options to reduce the hit to the airline industry from the closure of Pakistan’s airspace, the Reuters report said, citing unnamed sources.
The report said Indian carriers met with the Civil Aviation Ministry to work on possible solutions, including flying over difficult terrain closer to China, and some tax exemptions.
In its letter, Air India asked the government to liaise with Chinese authorities for certain overflight clearances, without elaborating.
It also asked the government to approve the carrying of extra pilots on flights to the United States and Canada to account for longer travel times.
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