Air India has written to the central government, seeking compensation for the massive financial hit the carrier expects to take if Pakistan airspace ban continues amid the threat of an India-Pakistan war.
India-Pakistan war: Amid escalating tensions and the threat of an India-Pakistan war after last week’s deadly Pahalgam terror attack, both sides have announced tit-for-tat moves, with New Delhi suspending the critical Indus Water Treaty, and Islamabad closing its airspace to Indian airlines, which could cost Air India– India’s national carrier– a whopping $600 million (around Rs 5078.32 crore) in additional costs if the Pakistan airspace remains closed for a year.
Air India seek compensation, writes to Centre
According to Reuters report, Air India has written to the BJP-led central government, seeking compensation for the massive financial hit the carrier expects to take if Pakistan does not open its airspace for Indian carriers.
In the April 27 letter sent by Air India to the Union Ministry of Civil Aviation, the airline has asked the government for a “subsidy model” proportionate to the economic hit, estimating a loss of more than $591 million. “Subsidy for affected international flights is a good, verifiable and fair option … the subsidy can be removed when the situation improves. The impact on Air India is maximum due to airspace closure, due to additional fuel burn…additional crew,” the letter said, according to Reuters.
As per the report, the letter was sent after the central government asked its executives to assess the impact of Pakistan airspace ban on Indian carriers.
Indian carriers brace for financial hit
Indian airlines are bracing for higher fuel costs and longer journey times after Pakistan shut its airspace to the country’s carriers in a tit-for-tat move, and representatives of several major carrier, including Air India, met with Civil Aviation Ministry to work on possible solutions, including flying over difficult terrain closer to China, and some tax exemptions, the report said, citing sources familiar with the matter.
In its letter, Air India has urged the government to liaise with Chinese authorities for certain overflight clearances, without elaborating. The Tata Group owned airline has also asked the Centre to approve the carrying of extra pilots on flights on the United States and Canada to account for longer travel times, as per the Reuters report.
“Subsidy for affected international flights is a good, verifiable and fair option … the subsidy can be removed when the situation improves,” reads the letter from Air India.
Notably, Air India, which has a 26.5% market share in Indian civil aviation space, is already facing growth constraints due to jet delivery delays from Boeing and Airbus. The airline reported a net loss $520 million in fiscal 2023-2024, on sales of $4.6 billion.
Air India operates more long-haul routes than bigger domestic rival IndiGo, and flies to Europe, the United States and Canada, often via Pakistani airspace. As per data from Cirium Ascend, 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.
Centre mulls options
Meanwhile, the Central government is weighing options to reduce the impact of the financial hit the airline industry from the closure of Pakistan’s airspace, the report said, citing sources.
Air India has not issued any official comment on the matter.
