Air India Seeks Government Aid as Pakistan Airspace Ban Threatens $600M Loss

Air India has requested government compensation after estimating a potential $600 million loss if Pakistan’s airspace ban lasts a full year. The request, revealed in a letter to India’s Civil Aviation Ministry seen by Reuters, follows Pakistan’s decision to block Indian carriers in retaliation for a deadly Kashmir attack.

The Tata-owned airline has asked for a proportional “subsidy model,” citing additional fuel consumption, extended flight durations, and higher crew costs. "Subsidy for affected international flights is a good, verifiable and fair option," the letter stated, adding the aid could be withdrawn once normal operations resume.

Air India, which holds a 26.5% share of the domestic market, operates numerous long-haul flights to North America and Europe that typically transit Pakistan’s airspace. The ban disproportionately impacts Air India more than budget rival IndiGo, due to its broader international network.

Data from Cirium Ascend shows Air India, Air India Express, and IndiGo had roughly 1,200 flights scheduled from New Delhi to long-haul destinations in April. The Indian government is now evaluating ways to reduce the blow to airlines, including alternative flight paths over Chinese airspace and possible tax relief.

Air India’s appeal comes as it undertakes a multi-billion-dollar turnaround effort amid jet delivery delays from Boeing and Airbus. It posted a $520 million net loss in FY2023-24 on $4.6 billion in revenue.

In its letter, Air India also asked the government to coordinate with Chinese authorities for overflight permissions and to allow extra pilot staffing on North American routes due to increased travel times.

The Civil Aviation Ministry has yet to comment, and Air India declined to respond to media inquiries.