Air India is lobbying the Indian government to request China to allow use of sensitive military airspace over its Xinjiang region to shorten international flight routes, aiming to ease severe financial strains caused mainly by the ongoing ban on Indian carriers flying over Pakistan's airspace. The airline, India’s only major international carrier, faces escalating fuel costs up to 29% higher and journey extensions of up to three hours on key long-haul routes such as to the US, Canada, and Europe.

This has resulted in estimated losses of $455 million annually directly attributed to the Pakistan airspace closure and pushed the airline’s fiscal year 2024-25 loss to $439 million. Air India estimates that gaining access through the Hotan route in Xinjiang could reduce fuel costs, shorten flight times, and help restore passenger and cargo capacity trimmed by up to 15 percent on affected routes, cutting losses by about $1.13 million weekly.

However, the Xinjiang airspace sits within China’s Western Theater Command, a militarily sensitive zone with heavy missile, drone, and air-defense assets, and shares airports with the Chinese military, making the request diplomatically and operationally complex. Analysts doubt China will grant access given safety risks from mountainous terrain over 20,000 feet high and the lack of emergency airports, compounded by geopolitical and security concerns.

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The closure of Pakistan’s airspace to Indian carriers started in late April amid diplomatic tensions and forced Air India to suspend some key routes such as Delhi-Washington. Other critical connections like Mumbai and Bengaluru to San Francisco have become commercially unviable due to extended travel times and technical stops. The added hours have driven passengers to opt for foreign carriers flying shorter routes that use Pakistan airspace.

Beyond operational challenges, Air India faces mounting financial pressure from legacy tax liabilities totaling $725 million unresolved after its 2022 privatization sale to Tata Group and Singapore Airlines. The airline has requested temporary subsidies from the Indian government until Pakistan airspace reopens to alleviate severe cash flow burdens and support recovery efforts amid $70 billion aircraft acquisition plans.

This situation highlights the intertwined challenges of geopolitics, security, and economics impacting India’s aviation sector, with Air India positioned precariously between rising operational costs, diplomatic setbacks, and efforts to revitalize its international footprint.

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