Air India has put the cost of Pakistan's airspace closure at roughly $455 million a year in profit before tax, with fuel costs rising as much as 29% and up to three hours added to some long-haul flights.

The disclosure frames the stakes behind a diplomatic workaround now under negotiation. India is in talks with China to open a corridor over Xinjiang, potentially allowing Indian aircraft to route north through Chinese and Central Asian airspace on westbound services to Europe and North America. Civil Aviation Minister Kinjarapu Ram Mohan Naidu confirmed the discussions to reporters on Tuesday.

The talks have run for more than a year, according to the minister, with a possible route over Hotan, a city in southern Xinjiang, on the table. Air India estimates that access via Hotan could reduce its losses by about $1.13 million a week — a figure that, if realized, would claw back roughly $59 million annually against the $455 million hit.

Pakistan sits directly along the most efficient westbound paths from northern India. Before the closure, carriers could fly north and west through Pakistani airspace before continuing toward Europe and North America. Pakistan shut its airspace to Indian carriers in April 2025 after relations between the two countries deteriorated following the Pahalgam attack.

The economics of the detour have already forced network cuts. Air India suspended Delhi-Washington in August 2025, and its Mumbai- and Bengaluru-San Francisco services became harder to run efficiently with the longer routings.

The competitive distortion extends beyond Air India's own fuel bills. Foreign airlines that still use Pakistani airspace avoid the detour entirely, which makes their nonstop and one-stop services more competitive on India-Europe and India-North America traffic. Indian carriers are effectively competing on longer, costlier routings against rivals flying the direct path.

That imbalance matters for distribution as much as for cost. On long-haul itineraries where connection times and total journey duration drive bookings, a three-hour penalty can shift share toward Gulf and European hubs whose feeders face no such constraint. The $455 million figure, disclosed by the carrier itself, quantifies what Indian carriers are losing before any assessment of market share erosion.

The Chinese negotiation also lands at a delicate moment in bilateral aviation. India and China are rebuilding an aviation relationship that was frozen for five years: direct flights have restarted, and Prime Minister Modi and President Xi met in New Delhi during this month's BRICS Summit. Airspace access is a technical request, but it rides on a political thaw that has only recently taken hold.

For sellers of travel, the outcome will determine whether Indian carriers can restore competitive economics on some of their most lucrative long-haul routes — or whether the detour penalty, and the share shift it enables, persists. No timeline for a Chinese decision has been disclosed, and the Hotan corridor remains a proposal under negotiation rather than an agreed route.