Pakistan Shuts Airspace, Indian Aviation in Trouble
Following last week's attack targeting tourists in Kashmir, Pakistan has shut its airspace to Indian airlines, and Indian aviation is seeking aid from the government.
According to a Reuters report, an internal company letter revealed that if Pakistan's ban on Indian Airlines (Air India) airspace lasts for a year, the company is expected to face approximately $600 million in additional costs. Indian Airlines has requested compensation from the federal government.
The latest round of tensions between India and Pakistan was triggered by an attack that occurred on April 22nd last week, at a tourist spot in Pahalgam, a region controlled by India in Kashmir. The attackers killed 25 Indians and one Nepalese, while nearly 20 others were injured, most of whom were Indian citizens.
After the incident, the Modi government ordered the closure of major border crossings with Pakistan.
In retaliation, Pakistan closed its airspace to Indian airlines, putting pressure on Indian Airlines due to rising fuel costs and extended flight routes.
On April 27th, Indian Airlines requested the government to establish a "subsidy mechanism" based on economic losses. In a letter to the Ministry of Civil Aviation, the airline estimated that the ban would result in losses exceeding 50 billion Indian rupees [$591 million] per year.
"Subsidizing affected international flights is a good, verifiable, and fair option... The subsidy can be canceled when the situation improves," the letter stated.
The letter also mentioned, "Due to the airspace closure, Indian Airlines is affected the most, not only with increased fuel consumption... but also requiring additional crew members."
Reuters reported that Indian Airlines declined to comment. The Ministry of Civil Aviation also did not immediately respond to requests for comment.
Insiders revealed that Indian Airlines sent this letter in response to the government's request for senior management to assess the impact of the ban.
Indian Airlines also requested the government to negotiate with Chinese authorities.
Air India, owned by Tata Group and currently undergoing a multibillion-dollar restructuring, used to be government-owned. Its growth has been constrained by delays in deliveries of Boeing and Airbus aircraft. The company reported sales of $4.6 billion in the 2023-2024 fiscal year, with a net loss of $520 million.
Indian Airlines holds a 26.5% share of the domestic market and covers Europe, the United States, and Canada, often flying over Pakistani airspace. By comparison, it operates significantly more long-haul routes than its domestic competitor, IndiGo.
Data from aviation analytics firm Cirium Ascend shows that IndiGo, Indian Airlines, and its low-cost subsidiary, Air India Express, planned approximately 1,200 flights from New Delhi to Europe, the Middle East, and North America in April.
Three other sources familiar with the matter said that the Indian government is considering measures to mitigate the impact of Pakistan's airspace closure on the aviation industry.
One of the sources said that Indian Airlines has met with the Ministry of Civil Aviation to discuss possible solutions, including rerouting flights near China's complex terrain and obtaining certain tax exemptions.
In the letter, Indian Airlines also requested the government to negotiate with Chinese authorities for specific air route overflight permits, but did not provide details.
In addition, Indian Airlines requested the government's approval to add extra pilots on flights to the United States and Canada to address the issue of extended flight routes.
Source: Reuters
India-Pakistan Conflict Escalates Again
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