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Updated on: Tuesday, May 28, 2019, 11:47 PM IST

Pakistan air space closure adds Rs 300 crore to Air India’s losses

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New Delhi: Air India has suffered losses of around Rs 300 crore since late February as its long haul flights from New Delhi are taking longer to reach destinations in Europe, the Gulf and the US because of the closure of Pakistan’s airspace.

The Pakistani airspace has remained shut for traffic to and from India ever since hostilities broke out between the two countries after the Pulwama suicide bombing in Jammu and Kashmir on February 14.

With its aircraft operating from New Delhi spending longer time in air, Air India is incurring daily loss of Rs 6 crore on extra fuel burn, cabin staff expenses and reduced flights.

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An Air India official said that the airline has significant operations to Europe and North America and the diversion of flights due to closure of Pakistani airspace had so far caused a total loss of about Rs 300 crore. “The losses on account of payload restriction and cancellation alone is about Rs 2.75 crore per day. The longer flying time has affected the duty hours of cabin staff and pilots,” he said.

The national carrier has approached the Civil Aviation Ministry to ensure it is compensated for the loss given that the airline cannot pull out these flights due to various obligations. “Air India has communicated to us about this. It is being taken up with all concerned,” a Ministry official said.

The Air India flights to the US from Delhi now take 2-3 hours extra one way due to the restrictions over Pakistani airspace. Flights to Europe are taking almost two hours more resulting in financial loss. Almost the entire air traffic from South East Asia to Europe has also been impacted as they would pass through north India into Pakistan and onwards.

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Airlines likely to see ‘volatility’ in profit
Financial costs are likely to climb further for airlines in the near term, with new accounting standards on leases set to create “significant volatility” in their profit and loss accounts.

Indian Accounting Standard 116 or Ind AS-116 has come into effect from April 1 and pertains to principles for recognition, presentation and disclosure of leases.The standard, notified by the corporate affairs ministry, would have a significant impact on various industries such as airlines, where aircraft operated are mostly on lease.

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Published on: Monday, April 29, 2019, 02:39 AM IST
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