# Middle East Conflict and Pakistani Airspace Ban Crush Indian Airlines While Foreign Carriers Profit

> Ongoing Middle East tensions and Pakistan's airspace ban have severely hit Indian airlines, causing a sharp drop in their international passenger market share while foreign carriers rake in major profits.

**Type:** article · **Category:** Business · **Published:** 2026-08-22 · **Source:** TrendKia
**Canonical:** https://trendkia.com/en/business/west-asia-conflict-and-pakistani-airspace-ban-crush-indian-airlines-while-foreign-carriers-profit-20085 · **Language:** English
**Tags:** Indian Airlines, International Flights, Pakistani Airspace, West Asia Conflict, DGCA Data, Foreign Carriers

Indian aviation companies are facing unprecedented operational and financial pressures as the ongoing conflicts across West Asia combine with crippling airspace restrictions to reshape the country's travel landscape. While domestic operators struggle to keep long-haul routes viable under heavy economic burdens, international carriers are rapidly expanding their footprint and capturing the displaced market share.

Latest international passenger traffic figures released by the Directorate General of Civil Aviation indicate that the total number of travelers moving in and out of India during the April-June quarter dropped by 9.1 percent year-on-year to 1.72 crore. This entire contraction was driven by steep losses in the domestic airline segment, whereas foreign operators managed to attract higher volumes despite the turbulent regional backdrop.

## Why Indian Airlines Are Losing Ground
The core of the crisis for Indian carriers stems from a combination of geopolitical fallout and geographic disadvantages. Since late April 2025, Pakistan has kept its airspace closed to Indian aircraft following diplomatic friction sparked by the Pahalgam terror attack, prompting India to enforce a reciprocal ban on Pakistani flights that gets extended on a monthly basis.

This ongoing blockade disrupts roughly 800 weekly flights operated by Indian airlines connecting northern hubs to West Asia, Europe, the UK, and North America. Forced to take longer detours and make unexpected refueling stops, carriers like Air India and Indigo encountered massive cost spikes and fuel shortages even before full-scale military hostilities broke out in West Asia. The subsequent war in the region forced further flight cancellations and capacity cuts, rendering many western routes financially unsustainable.

## How Foreign Operators Capitalized on the Crisis
In stark contrast to the struggles faced by domestic firms, foreign airlines have sailed through with minimal disruption because they continue to enjoy unrestricted access to Pakistani airspace. When tensions flared in West Asia and several international routes faced capacity rollbacks, foreign carriers swiftly redeployed their available aircraft onto lucrative India-linked sectors.

Official figures show that total passenger traffic handled by foreign airlines grew by 6 percent, climbing from 1.02 crore to 1.08 crore. Consequently, the market share of foreign operators surged from 53.8 percent to 62.7 percent. Meanwhile, Indian airlines suffered a 26.6 percent collapse in total international passengers down to 64.2 lakh, shrinking their combined market share from 46.2 percent to just 37.3 percent.

## Performance Breakdown of Major Carriers
The severe downturn rippled across nearly every prominent domestic airline, leaving deep scars on their quarterly metrics.

- **Indigo:** The country's largest carrier recorded a 15.4 percent drop in international travelers, with its market share contracting to 19.4 percent.
- **Air India:** Passenger volume plummeted by 27.2 percent, pulling the airline's market share down to 11.2 percent.
- **Air India Express:** Heavily reliant on Middle Eastern networks, this carrier saw its passenger traffic cut in half to 8.34 lakh.
- **SpiceJet:** Experienced the steepest decline among all operators, posting a staggering 56 percent drop in international traffic.
- **Akasa Air:** Stood out as the sole Indian airline to register growth, expanding its international passenger traffic by 26 percent year-on-year to 1.72 lakh, aided by a low initial base and fleet additions.

## What this means for you
**Across India:** Travelers flying internationally may face higher airfares and limited seat availability as domestic carriers scale back operations.

**In the Aviation Sector:** Local airlines will face persistent financial strain while foreign operators strengthen their dominance over Indian skies.

## Questions & Answers

### 1. What was the overall decline in international passenger traffic?
Total international passenger traffic in and out of India dropped by 9.1 percent year-on-year to 1.72 crore in the first quarter.

### 2. How much did the market share of Indian airlines shrink?
The market share of Indian airlines fell from 46.2 percent down to 37.3 percent.

### 3. When was Pakistani airspace closed to Indian flights?
Pakistan closed its airspace to Indian aircraft on April 24, 2025.

### 4. Which was the only Indian airline to record growth in international traffic?
Akasa Air was the sole Indian carrier to register growth, increasing its international passenger traffic by 26 percent.

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