Air India Seeks Government Subsidy Amid $600 Million Blow from Pakistan Airspace Ban
Air India has warned the Indian government that it could face additional annual costs of over $591 million if Pakistan’s airspace remains closed for a year, following heightened diplomatic tensions over the recent Pahalgam terror attack. In a letter sent on April 27 to the Ministry of Civil Aviation, the airline requested a temporary subsidy model to offset the economic fallout, citing soaring fuel consumption and extended crew requirements for its international operations, especially long-haul flights to Europe and North America.
With a 26.5% market share, Air India has been among the hardest hit by the ban, as many of its routes traditionally rely on Pakistan’s airspace for optimal flight paths. The airline, which reported a $520 million net loss for FY 2023–24, is already navigating a major restructuring under Tata Group ownership and facing delays in aircraft deliveries from Boeing and Airbus. Meanwhile, competitors like IndiGo, with fewer long-haul operations, have experienced relatively lower impact.
The Indian government is reportedly evaluating various measures to support affected airlines, including possible tax exemptions and alternate routing options over Chinese airspace. Air India has also urged the government to engage with Chinese authorities for overflight permissions and approve extra pilot allocations for longer US and Canada-bound flights. Ministry officials are said to be in ongoing discussions with carriers to develop solutions amid rising industry-wide cost pressures.
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