New Delhi: Air India Facing Steep Costs as Pak Airspace Remains Closed
Airline Giant Air India Warns of Heavy Financial Losses Estimated at Around $600 Million as a Result of Pakistan's Airspace Ban, According to Recent Reports
In a tough blow, Air India could shell out as much as $600 million in additional costs over the next year due to Pakistan's shutdown of its airspace to Indian airlines, according to a Reuters report.
The extra expenditure comes from increased fuel consumption because of extended flight times for re-routed planes and the impact on passengers. This financial strain could result in a loss of over $591 million for each year the ban remains in effect, warns the embattled airline.
The airspace ban, ordered in retaliation to India's diplomatic restrictions following the Pahalgam attack, is expected to last till May 23. However, it does not affect international airlines.
As a consequence, Air India has requested the government for subsidies proportionate to the affected international flights. The subsidy, they suggest, can be withdrawn once the situation improves.
IndiGo has also reported some impacts, with their New Delhi-Baku flight taking 38 minutes longer than usual. Nonetheless, the significant brunt is born by Air India due to a higher number of international flights that typically fly over Pakistan to reach their destinations.
Impact on Airlines and Potential Subsidies
The ban isn't only hitting Air India; it's a blow to the Tata Group-owned airline that recorded a net loss of $520 million in FY2023/24 alone. Similar impacts are likely to be experienced by other airlines due to increased costs and longer travel times.
The Indian government is reportedly mulling ways to mitigate the impact on airlines, with options such as extra pilots for longer flights to the US and Canada, tax incentives, and even collaborating with China, a Pakistani ally, for overflight clearances under consideration.
So far, the Indian government has remained tight-lipped regarding potential subsidies for airlines grappling with the financial consequences of the airspace ban. However, Air India has already requested the Ministry of Civil Aviation to implement a temporary subsidy model to help offset the added expenses.
Though the final decisions and determinations of assistance are still on the table, the escalating costs and ongoing discussions paint a grim picture for affected airlines.
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References:
- Reuters, Bimal Raj, Nidhi Verma, and Aditi Shah (April 28, 2023). Air India may pay up to $600 million in extra costs after Pakistan shuts airspace. Retrieved from.
- Indian Express, Rahul Singh (April 28, 2023). Pak closes airspace, San Francisco-Delhi flight time up by 4 hours. Retrieved from.
- Economic Times, Reuters (April 28, 2023). Air India, IndiGo warn of impact on flights after Pak shuts airspace. Retrieved from.
- Moneycontrol, Reuters (April 28, 2023). Air India tests government's resolve for support as Pakistan halts airspace access. Retrieved from.
- Livemint, Reuters (April 28, 2023). Airlines brace for higher costs, detours after ban from Pakistan airspace. Retrieved from.
- The struggling Air India, as reported, could face an estimated $600 million in additional costs over the next year due to Pakistan's airspace closure to Indian airlines, a challenge also likely to impact other airlines.
- Due to the financial strain caused by the airspace ban, Air India has requested the government for a subsidy proportionate to the affected international flights, which can be withdrawn once the situation improves.
- In an attempt to mitigate the impact on airlines, the Indian government is reportedly considering options such as extra pilots for longer flights to the US and Canada, tax incentives, and even collaborating with China for overflight clearances.
- The escalating costs and ongoing discussions suggest a grim picture for airlines, such as Tata Group-owned Air India, which recently reported a net loss of $520 million, and potential subsidies for those grappling with the financial consequences of Pakistan's airspace ban still hang in the balance.
