The airline has written to the civil aviation ministry, asking for a ‘subsidy model’ to cover increased fuel and crew expenses because of longer flight times and delays due to the airspace ban
Air India also requested the government to build a connection with Chinese authorities for overflight clearances and to approve the addition of extra pilots. | Photo: Bloomberg
Indian carrier Air India has warned it could face an additional $600 million in costs if Pakistan’s airspace remains closed for a full year. The airline has requested a subsidy model for its international flights from the Indian government to offset the financial impact, according to a letter it sent to India’s ministry of civil aviation.
Impact on Air India
Indian airlines are already preparing for higher fuel costs and longer travel times after Pakistan closed its airspace to Indian carriers following India’s diplomatic actions in retaliation for the recent killing of tourists in Pahalgam in Jammu and Kashmir.
According to the letter, seen by news agency Reuters, Air India on April 27 asked the Indian government for a “subsidy model” to address the economic losses, estimating it could lose more than $591 million annually for as long as the airspace ban continues. The airline suggested that the subsidy be temporary, stating, “Subsidy for affected international flights is a good, verifiable and fair option… the subsidy can be removed when the situation improves.”
The letter claimed that Air India, which has a 26.5 per cent market share in the country, has been hit hardest by the airspace closure due to increased fuel consumption and the need for additional crew. Air India declined to comment, and the Ministry of Civil Aviation was unavailable for immediate comment.
A double-whammy for Air India’s finances
The request for financial support came after the Indian government asked airline executives to assess the impact of the airspace ban on the country’s carriers, according to sources familiar with the matter, Reuters said.
Air India, now owned by the Tata Group, is undergoing a multi-billion-dollar turnaround following decades of government ownership. However, its growth is already limited by delays in aircraft deliveries from Boeing and Airbus. The airline reported a net loss of $520 million for the fiscal year 2023-2024, with total sales of $4.6 billion.
Air India operates long-haul flights to Europe, the US, and Canada, often crossing Pakistan’s airspace. In comparison, its larger domestic rival, IndiGo, operates fewer long-haul routes. According to data from Cirium Ascend, Air India, its budget subsidiary Air India Express, and IndiGo were scheduled to operate around 1,200 flights from New Delhi to destinations in Europe, the Middle East, and North America.
GoI considering options to mitigate pain
The Indian government is reportedly currently exploring options to mitigate the impact of the airspace closure on Indian airlines, sources familiar with the issue told the news agency.
One source told Reuters that Indian carriers have met with the ministry officials to discuss potential solutions, including routes over difficult terrain closer to China, as well as possible tax exemptions.
In its letter, Air India has also requested the government to connect with Chinese authorities for overflight clearances and to approve the addition of extra pilots on long-haul flights to the US and Canada to account for longer journey times.
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