Air India CEO Campbell Wilson has recently highlighted the financial strain that the ongoing ban on using Pakistani airspace is placing on the airline. This restriction, which forces flights to take longer and more circuitous routes, is significantly increasing operational costs.
Wilson stated that the longer flight times, particularly on routes to North America and Europe, are adding to the airline's fuel consumption and crew expenses. Flights to Europe are now approximately an hour longer, while those to North America can take up to three hours more. Initially, Air India implemented intermediate refueling stops on several non-stop flights. However, the airline has since been able to re-optimize flight paths and reinstate most of its non-stop services. Only a few flights continue to require refueling stops, adding time, cost, and inconvenience.
The CEO has indicated that these increased costs will ultimately be passed on to consumers, either through higher ticket prices or reduced seat availability. With longer routes, there are fewer seats available and remaining seats are under higher demand, or the actual cost increase is passed through. He expressed hope for a swift resolution to the airspace issue but acknowledged that the matter is beyond Air India's control.
Air India estimates that the airspace ban could result in approximately $600 million in additional expenses annually if the situation persists. In light of these potential losses, the airline has requested compensation from the Indian government to help offset the economic impact. The airline suggested a "subsidy model" proportionate to the economic impact of the airspace closure.
The closure of Pakistani airspace impacts Air India the most due to additional fuel burn and additional crew requirements. The CEO mentioned that the airline is discussing the issue with the government, regarding financial help and support.
Despite the challenges posed by the airspace ban, Air India is actively exploring alternative routes and strategies to mitigate the impact on its operations. For instance, some flights to San Francisco are now routed through Kolkata for refueling. The company maintains that most of its routes to North America continue to operate non-stop. Wilson clarified that the addition of extra flights into North America is a function of aircraft deliveries, not airspace restrictions.
Air India has been undergoing a significant transformation since being acquired by the Tata Group in early 2022. This transformation includes merging four airlines into two, re-platforming its IT infrastructure, inducting new staff, and increasing its operational aircraft fleet. Air India has gone from less than 100 operating aircraft to more than 300. The airline has also added 17 wide-body aircraft, increased international destinations by 25%, and restructured its network to improve connection times.
Air India is also investing in retrofitting its narrow-body and wide-body aircraft to improve efficiency and passenger experience. The first wide-body aircraft is scheduled for a full interior refit in July 2025 and is expected to be back in service around September or October 2025, with additional aircraft being refitted each month thereafter. The full Air India widebody fleet is expected to be effectively what you're seeing on the A350 today by the end of 2027.
Despite these challenges, Wilson remains confident in Air India's trajectory. The airline is aiming to achieve profitability in the next few years and is focused on improving customer satisfaction. Air India has tripled cargo tonnage, doubled revenue, and increased revenue from business class passengers since privatization. The airline's customer Net Promoter Score (NPS) has also increased significantly in the past 18 months.
