Air India has proposed a levy on aviation fuel bought in India to help pay for the extra cost of Pakistan’s airspace closure, which has forced its flights to Europe and North America to take longer routes. The proposal was reported by The Hindu BusinessLine on 5 November 2026, citing industry sources. It is a proposal, not a decision — the levy rate has not been fixed, and Air India and the Civil Aviation Ministry have not commented on it.

What Air India has proposed

  • A nominal levy per litre of aviation turbine fuel (ATF) uplifted in India, paid by both Indian and foreign airlines.
  • Collections from Indian carriers would be returned to them through a special bulk discount on fuel.
  • Collections from foreign airlines would fund additional discounts for Indian carriers affected by the airspace closure.
  • The additional discounts would be linked to how badly each Indian airline is hit by the closure.
  • The idea is to partly meet the airspace-related burden without direct budgetary support from the government. The final levy rate and the way discounts are shared would depend on whether the proposal is accepted.

Why Air India is asking for help

Pakistan closed its airspace to Indian carriers in April 2025, after the Pahalgam terror attack. The closure is still in force. Air India’s Europe and North America services now fly longer routes, which means more flying time, more fuel burnt, more crew hours and worse use of aircraft. Around 800 weekly flights operated by Indian airlines have been affected by the closure.

The cost is large. It was earlier estimated that the closure could have an annualised financial impact of around Rs 5,000 crore on Air India alone — about $600 million a year. Air India had earlier asked the government for a subsidy model for its affected international flights, saying the subsidy could be withdrawn once the situation improves.

Indian airlines have also asked the government for other relief, including a temporary deferment of the 11% excise duty on aviation turbine fuel. Fuel is about 40% of an airline’s operating costs, so any fuel relief matters more than almost anything else.

What it means for passengers

  • No fare change has been announced. This proposal is about airline costs, not ticket prices, and it is not yet approved.
  • Longer flights continue: as long as the airspace stays shut, India–Europe and India–North America flights will keep taking longer routes, with longer flying times than before April 2025.
  • Foreign airlines benefit: because foreign carriers can still use Pakistan’s airspace, they fly shorter routes to India than Indian carriers do on the same sectors. That is the cost disadvantage Air India’s proposal is trying to fix — by making foreign carriers’ fuel purchases in India help pay for it.

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