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Air India to face $600 million loss from Pakistan airspace ban, seeks govt compensation: Report
Air India, with a 26.5% market share, flies to Europe, the US, and Canada, often over Pakistan, and operates more long-haul routes than IndiGo.
The closure of Pakistan’s airspace is expected to cost Air India around $600 million over the course of a year, Reuters reported, citing a company letter in which the airline urged the government to provide compensation.
Indian airlines are preparing for increased fuel expenses and extended flight durations after Pakistan closed its airspace to Indian carriers, a retaliatory move following last week's attack on tourists in Pahalgam.
On April 27, Air India requested the government to implement a “subsidy model” proportionate to the economic impact of the airspace closure.
Air India estimated losses exceeding 50 billion Indian rupees (approximately $591 million) for each year the airspace ban remains in effect, Reuters added in its report, citing a letter sent to the civil aviation ministry.
“Subsidy for affected international flights is a good, verifiable and fair option ... the subsidy can be removed when the situation improves,” the news agency quoted the letter as saying.
“The impact on Air India is maximum due to airspace closure, due to additional fuel burn...additional crew,” the airline said.
The report also added that Air India declined to comment, and civil aviation ministry did not immediately respond to a request for comment.
Quoting a source, Reuters reported that Air India's letter was sent after the government asked its executives to assess the impact of the airspace ban on Indian carriers.
The Tata Group-owned airline is undergoing a multi-billion dollar turnaround following a period of government ownership. However, its growth is already hindered by delays in jet deliveries from Boeing and Airbus.
Air India reports $520 million loss in 2023-2024
Air India reported a net loss of $520 million in fiscal 2023-2024, with sales totaling $4.6 billion.
Having a 26.5 per cent market share in India, Air India flies to Europe, the United States, and Canada, often crossing Pakistan’s airspace. The airline operates many more long-haul routes than its larger domestic rival, IndiGo.
Quoting data from Cirium Ascend, Reuters also mentioned in its report that 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 government is considering options to mitigate the impact of Pakistan's airspace closure on the airline industry, three other sources familiar with the matter were quoted as saying in the report.
With Reuters inputs
