The airline has asked the Indian government for financial relief equivalent to its estimated losses.
Air India expects to face about $600m in additional costs if a ban from Pakistan’s airspace lasts for a year and has asked the Indian government to compensate it for the hit.
The New Delhi-based air carrier on Sunday asked the government for a “subsidy model” proportionate to the economic hit, estimating a loss of more than $591m (50 billion Indian rupees) for each year the ban lasts, according to a letter sent by the airline to the Ministry of Civil Aviation and seen by the news agency Reuters.
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 retaliation following an attack on tourists in Kashmir last week.
“Subsidy for affected international flights is a good, verifiable and fair option. … The subsidy can be removed when the situation improves,” the letter said according to the report.
“The impact on Air India is maximum due to airspace closure, due to additional fuel burn, … additional crew.”
Air India declined to comment to Reuters. The Civil Aviation Ministry did not respond to the outlet’s request for comment.
Air India’s letter was sent after the government asked its executives to assess the impact of the airspace ban on Indian carriers, said a source with direct knowledge of the matter.
The Tata Group-owned airline is in the midst of a multibillion-dollar turnaround after a period of government ownership, and growth is already constrained by jet delivery delays from Boeing and Airbus. It reported a net loss of $520m in fiscal 2023-2024, on sales of $4.6bn.
Air India, which has a 26.5 percent market share in India, flies to Europe, the United States and Canada, often crossing Pakistan’s airspace. It operates many more long-haul routes than domestic rival IndiGo.
Data from Cirium Ascend shows IndiGo, Air India and its budget unit Air India Express have roughly 1,200 flights combined from New Delhi scheduled for Europe, the Middle East and North America in April.
The Indian government is considering options to reduce the hit to the airline industry from the closure of Pakistan’s airspace, three other people familiar with the matter said.
One of the sources said Indian carriers met with the Civil Aviation Ministry to work on possible solutions, including flying over difficult terrain closer to China and some tax exemptions.
In its letter, Air India asked the government to liaise with Chinese authorities for certain overflight clearances without elaborating.