Air India anticipates a loss of approximately $600 million over the next year due to Pakistan’s closure of its airspace to Indian carriers.
This move, a retaliatory response to recent geopolitical tensions, has compelled Indian airlines to reroute flights, leading to increased fuel consumption, extended flight durations, and additional crew requirements. The national carrier, now under the Tata Group, formally approached the Indian government on April 27, seeking a subsidy model to offset the economic impact of the airspace ban. In its communication to the Civil Aviation Ministry, Air India emphasized that the financial strain is most pronounced on its international operations, which frequently traverse Pakistani airspace to destinations in Europe, North America, and the Middle East.
“Subsidy for affected international flights is a good, verifiable, and fair option… the subsidy can be removed when the situation improves,” the airline stated in its letter. The request underscores the urgency of governmental intervention to sustain the viability of long-haul routes that are now facing operational challenges. The closure of Pakistani airspace has not only disrupted flight schedules but also led to significant delays. For instance, Air India’s flights from San Francisco and Toronto were rerouted to Copenhagen, resulting in delays exceeding nine hours. Similarly, flights from Paris and London were diverted to Abu Dhabi, causing substantial inconvenience to passengers and escalating operational costs for the airline
The broader Indian aviation sector is grappling with the repercussions of the airspace ban. Data from Cirium Ascend indicates that in April alone, Air India, along with its budget unit Air India Express and IndiGo, had approximately 1,200 flights scheduled from New Delhi to Europe, the Middle East, and North America. The rerouting of these flights has led to increased fuel expenses and logistical complexities, further straining the financial health of these carriers. Air India’s financial challenges are compounded by its ongoing restructuring efforts. The airline reported a net loss of $520 million for the fiscal year 2023-2024, with revenues totaling $4.6 billion. Delays in aircraft deliveries from Boeing and Airbus have also impeded the airline’s growth trajectory, making the current situation even more precarious.
The Indian government is reportedly evaluating measures to mitigate the economic fallout from Pakistan’s airspace closure on the aviation industry. Potential solutions include seeking overflight approvals from alternative countries and offering tax incentives to affected airlines. However, no official statement has been released by the Civil Aviation Ministry regarding Air India’s subsidy request. The airspace ban stems from escalating tensions between India and Pakistan following a deadly attack in Kashmir’s Pahalgam region, which resulted in the deaths of 26 tourists. India has attributed the attack to Pakistani nationals, leading to a series of retaliatory measures, including the suspension of the Indus Waters Treaty and the closure of airspace to Pakistani airlines. In response, Pakistan has denied involvement and called for a neutral investigation.
The mutual airspace closures have not only disrupted aviation operations but also exacerbated diplomatic strains between the two nuclear-armed neighbors. The situation remains volatile, with international stakeholders urging both nations to de-escalate tensions and restore normalcy. As the standoff continues, the Indian aviation industry, particularly Air India, faces mounting financial pressures. The airline’s appeal for governmental support underscores the need for swift policy interventions to safeguard the sector’s sustainability and ensure uninterrupted connectivity for passengers.
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