✈️ Air India Faces $600 Million Blow From Pakistan Airspace Ban, Seeks Government Help

Tata-owned airline warns of massive losses from fuel costs and longer flight times; government considers subsidies, tax breaks, and even China route clearances.

May 2, 2025, New Delhi:
Air India may face losses of up to $600 million if Pakistan continues to block its airspace for Indian carriers, according to a report by Reuters, which accessed an internal company letter sent to the Civil Aviation Ministry.

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The airspace restriction, a retaliatory move by Pakistan after India’s strong diplomatic response to the Pahalgam terror attack, is severely impacting Indian airlines. Air India, which operates a large volume of international routes over Pakistani territory, is the worst hit.

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🔺 Why Air India Is Bleeding Cash

In the letter, Air India estimated a $591 million annual loss from increased fuel consumption and longer flight durations. These costs are piling up quickly as international flights—including long hauls to Europe, the Middle East, and North America—are being rerouted.

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The ban also affects Air India’s low-cost arm, Air India Express, and IndiGo, although to a lesser extent. On Thursday, an IndiGo Delhi-Baku flight took 38 minutes longer than usual due to detours.

“Impact on AI is maximum due to airspace closure, additional fuel burn, crew,” the airline wrote, seeking government subsidies to cushion the blow.

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🛫 Subsidy Pitch & Government Options

Air India proposed a direct subsidy for affected international routes as a “fair and verifiable option,” saying the measure could be rolled back once the situation stabilizes.

The Modi government, aware of the economic fallout of the diplomatic escalation, is reportedly weighing:

• Tax relief for affected carriers
• Approval for extra pilots on ultra-long-haul flights to the US/Canada
• Exploring overflight clearances via China despite diplomatic complexities

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🔥 Pahalgam Attack Fallout

The ban follows India’s strong retaliation after the Pahalgam terror attack that killed 26 people, including tourists. Prime Minister Narendra Modi had met with top security officials and is believed to have approved military responses targeting The Resistance Front, a Pakistan-backed terror group.

India has already suspended the Indus Waters Treaty, closed cross-border trade checkpoints, and is pushing to isolate Pakistan internationally, including efforts to re-list it on the FATF grey list.

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🧭 Strategic Impact

While Pakistan’s airspace ban applies only to Indian airlines, international carriers remain unaffected. This puts Indian operators at a competitive disadvantage, especially in trans-continental travel, where flight detours can extend up to four hours—as seen on San Francisco–Delhi routes.

With over 1,200 international flights operating out of Delhi in April alone, the commercial impact is both logistically challenging and financially draining.

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🏷️ Tags

Air India, Pakistan Airspace Ban, Pahalgam Attack, Flight Route Changes, Modi Government, Airline Losses, Aviation Subsidy, Tata Group, Civil Aviation India, FATF, Indo-Pak Tensions