Airspace Closure Crisis Triggers Soaring Costs for Indian Cargo and Airlines

In a sharp escalation following the April 22, 2025 terror attack, India suspended the Indus Waters Treaty. In retaliation, Pakistan closed its airspace to Indian carriers. India countered by banning Pakistani airlines from its airspace between April 30 and May 23, 2025—deepening the diplomatic and logistical crisis.

This bilateral standoff has forced cargo flights bound for Europe, the Middle East, and North America to take longer routes, increasing flight durations by 2 to 4 hours. These detours have significantly raised fuel consumption and crew costs, placing a heavy financial burden on Indian carriers.

Mounting Financial Strain on Airlines

Indian airlines are now absorbing an estimated ₹77 crore ($9.2 million) in additional weekly operating costs. Air India, a key cargo operator, has projected potential annual losses of up to ₹5,000 crore ($591 million) if the airspace restrictions persist. In a formal communication to the Civil Aviation Ministry, accessed by Reuters, the airline urged the government to implement a “subsidy model” to help offset these escalating losses. Logistics Insider reached out to Air India for comment, but no response was received.

Severe Delays for Perishable and Pharmaceutical Shipments

The prolonged airspace closure has severely impacted India’s $500 million perishable export sector, which includes mangoes, flowers, and seafood. According to The Economic Times, delays threaten to violate international quality benchmarks, risking spoilage and cancelled contracts. For example, a 4-hour delay on a Delhi–London cargo route could result in the total loss of time-sensitive shipments, particularly affecting exporters in Gujarat and Maharashtra.

India’s $50 billion pharmaceutical export industry is also under pressure. Shipments of critical goods like vaccines, insulin, and temperature-sensitive medicines rely on precise cold chain logistics. Delays and detours are now causing backlogs, especially from Hyderabad’s key pharma corridor, disrupting global healthcare supply chains.

E-commerce logistics have also felt the impact. Express cargo operators like Blue Dart and DHL, which depend on passenger aircraft belly space, are contending with rising costs—likely to be passed on to consumers through higher cross-border shipping charges.

Operational Bottlenecks and Route Constraints

Key northern cargo hubs—including Delhi, Amritsar, and Lucknow—have been hardest hit. Data from Cirium Ascend reveals Indian carriers conducted roughly 1,200 cargo flights from Delhi to global destinations in April alone. The crisis has already forced capacity reductions; for instance, IndiGo has suspended operations to Almaty and Tashkent.

Technical stops in cities like Vienna and Copenhagen for refueling are adding further delays. Some ultra-long-haul detours may even require aircraft modifications to handle high-altitude routes, further complicating operations.

Exploring Relief Measures and Alternative Pathways

The Indian government is currently exploring relief options such as operational subsidies and fuel tax exemptions. Meanwhile, negotiations with China are underway to secure expedited overflight permissions, as referenced in Air India’s letter. Alternative routing through Leh and over the Hindu Kush via Kyrgyzstan and Tajikistan is being evaluated, though this would require substantial infrastructure investment.

India may also approach the International Civil Aviation Organization (ICAO), asserting that Pakistan’s airspace restrictions violate the 1944 Chicago Convention on International Civil Aviation. A favorable decision could provide regulatory relief and restore partial access.

Foreign Carriers Capitalize on the Crisis

Foreign airlines such as Etihad Airways and Thai Airways, which are still permitted to use Pakistani airspace, have gained a significant competitive advantage in the India–Europe and India–Gulf cargo corridors. This disparity threatens to divert freight volumes away from Indian carriers, deepening the economic impact.

Even Pakistan International Airlines (PIA) has felt the repercussions, rerouting six weekly flights from Kuala Lumpur via Chinese airspace—incurring daily overflight costs of approximately $58,000. Pakistan has denied involvement in the Pahalgam attack and has demanded evidence to substantiate the claims.

Looking Ahead: Uncertainty and Urgent Need for Resolution

With no diplomatic resolution in sight, India’s air cargo industry faces sustained financial pressure, delivery disruptions, and a loss of international competitiveness. Exporters, freight providers, and consumers are all absorbing the consequences, highlighting the urgent need for either diplomatic intervention or viable international rerouting solutions to safeguard the country’s global supply chain.