In retaliation for India suspending the Indus Waters Treaty following the April 22, 2025, terror strike, Pakistan closed its airspace to Indian carriers. India responded by banning Pakistani airlines from its airspace from April 30 to May 23, 2025, intensifying the crisis. As a result, cargo flights bound for Europe, the Middle East, and North America must detour, adding 2–4 hours to flight times and burdening carriers with higher fuel and crew expenses.
The financial strain is significant. Indian airlines are absorbing Rs 77 crore ($9.2 million) in additional weekly costs due to increased fuel consumption and operational adjustments. Air India, a major cargo carrier, projects a $591 million annual loss if the ban persists, with cargo operations significantly affected. In a letter to the Civil Aviation Ministry, seen by Reuters, the airline requested a “subsidy model” to offset losses exceeding 5,000 crore ($591 million). Logistics Insider sought comment from Air India, but the airline did not respond.
Perishable and Pharmaceutical Shipments Face Severe Delays
The airspace standoff directly threatens India’s $500 million perishable export market, which includes highly time-sensitive commodities like mangoes, flowers, and seafood. As per The Economic Times, prolonged flight times risk breaching international quality standards, jeopardising contracts and causing spoilage. For example, a 4-hour delay on a Delhi-London cargo flight could render entire shipments unsellable, severely impacting exporters in Gujarat and Maharashtra.
The situation is equally critical for India’s $50 billion pharmaceutical export industry. Time-sensitive shipments such as vaccines, insulin, and temperature-controlled drugs rely on precise cold chain logistics. The rerouting crisis is causing delivery backlogs, particularly from Hyderabad’s pharma corridor, affecting healthcare supply chains worldwide.
India’s booming e-commerce logistics segment is also under pressure. Express air cargo operators like Blue Dart and DHL, which leverage passenger flight belly cargo, are facing rising costs. The burden is expected to be passed on to consumers, potentially raising cross-border e-commerce shipping rates.
Operational Challenges and Capacity Shortfalls
Key northern cargo hubs including Delhi, Amritsar, and Lucknow are among the worst affected. According to Cirium Ascend data, Indian carriers operated around 1,200 cargo-laden flights from Delhi to international destinations in April alone. The airspace restrictions have already resulted in reduced capacity, with IndiGo suspending flights to Almaty and Tashkent.
The need for technical stops in cities like Vienna and Copenhagen for refueling adds logistical complexity and delays. Additionally, ultra-long-haul detours might necessitate aircraft modifications for high-altitude routes, further straining airline operations.
Exploring Relief Measures and Alternative Routes
In response, the Indian government is evaluating a range of relief measures, including fuel tax exemptions and operational subsidies. Negotiations are also underway with China for expedited overflight permissions, as disclosed in Air India’s letter to the Ministry. A proposed alternative via Leh and the Hindu Kush region through Kyrgyzstan and Tajikistan is on the table, although it demands expensive infrastructure upgrades.
India may also seek intervention from the International Civil Aviation Organization (ICAO), asserting that Pakistan’s airspace ban contravenes the 1944 Chicago Convention on International Civil Aviation. A favourable ruling could alleviate cargo disruptions.
Foreign Airlines Gain Market Share Amid India’s Airspace Crisis
While Indian carriers suffer, foreign airlines such as Etihad Airways and Thai Airways, which continue operating through Pakistani airspace, have gained a competitive edge in the India-Europe and India-Gulf cargo corridors. This imbalance threatens to divert business away from Indian carriers, deepening the economic blow.
Pakistan International Airlines (PIA) is also impacted, rerouting six weekly Kuala Lumpur flights via Chinese airspace, incurring losses of around $58,000 daily in overflight fees. Pakistan has denied involvement in the Pahalgam attack and demands concrete evidence.
With no diplomatic breakthrough on the horizon, India’s air cargo industry braces for sustained financial strain, delayed shipments, and dwindling competitiveness. Exporters, logistics providers, and consumers alike will bear the brunt of escalating costs and disrupted trade flows, underlining the urgent need for diplomatic intervention or alternative international routes to safeguard India’s global supply chain links.
