Air India is expected to incur nearly $600 million in additional costs if Pakistan's airspace remains closed for a year. As a result, the airline has requested compensation from the Indian government.
Through a letter sent by Air India to India’s Ministry of Civil Aviation, the airline is seeking financial relief to offset the impact, according to an international media agency.
Following the recent terrorist attack on tourists in Indian-administered Kashmir, the Modi government has unofficially blamed Pakistan and taken several strong measures, including suspending the Indus Waters Treaty.
In retaliation, Pakistan imposed countermeasures, including banning Indian aircraft from using its airspace. Since then, Indian airlines have been preparing for longer routes and higher fuel costs.
On April 27, Air India submitted a proposal to the Indian government requesting a "subsidy model" in proportion to the financial loss. The estimated annual loss due to the restriction exceeds $591 million.
The letter stated that Air India is being disproportionately affected due to the airspace closure, increased fuel burn, and the need for additional crew. It suggested that subsidies for affected international flights would be a fair, verifiable solution and that the subsidies could be withdrawn once the situation improves.
Air India has declined to publicly comment on the letter. India’s Ministry of Civil Aviation also did not immediately respond to Reuters' request for comment.
A source with direct knowledge of the matter said the letter was sent after the Modi government instructed Air India executives to assess the impact of the airspace ban on Indian carriers.
Now owned by the Tata Group after more than a decade of government ownership, Air India has launched a multi-billion-dollar expansion.
However, its growth has already been limited due to delays in jet deliveries from Boeing and Airbus. The airline reported a net loss of $520 million in the 2023–2024 fiscal year. The Pakistan airspace closure presents yet another setback.
Indian airlines have already held discussions with the Civil Aviation Ministry to explore solutions, such as flying over difficult terrain near China and securing certain tax exemptions.
The letter also urged the government to engage with Chinese authorities for specific overflight clearances and to allow extra pilots on U.S. and Canada-bound flights to accommodate the extended travel times.
