Pahalgam Terror Attack Fallout: How Much Money Did Pakistan Lose from Airspace Ban on Indian Airlines

Pakistan Airports Authority has incurred losses of approximately PKR 4.1 billion (₹1,240 crore) in just over two months after closing its airspace to Indian-registered aircraft, the country’s defence ministry told the national assembly, as quoted by Dawn. The shortfall came from reduced overflight fees and is lower than earlier estimates of PKR 8.5 billion.

The airspace closure followed India’s decision to suspend India Waters Treaty in April this year, after the Pahalgam terror attack, in which 26 civilians were killed by Pakistan-based terrorists in Jammu and Kashmir. Starting April 24, Pakistan revoked overflight rights for all Indian-registered aircraft as well as planes operated, owned, or leased by Indian airlines.

India has extended the closure of its airspace for Pakistan planes by another month till August 24. Initially, the ban was to end on May 24 and the same was extended first till June 24 and then till July 24. This extension reflects continued strategic considerations and is in line with prevailing security protocols.

The ban is estimate to have impacted 100-150 Indian aircrafts each day, which reduced transit traffic by nearly 20%. While admitting to revenue losses, the ministry stressed that “sovereignty and national defence take precedence over economic considerations”.

It further noted that the figures represent lost revenue, not total financial losses. However, overflight and aeronautical charges remain unchanged.

Its impact has been extended beyond Pakistan’s aviation sector. Even Indian carriers including Air India, IndiGo, SpiceJet, and Akasa Air have encountered major operational hurdles since the restrictions were imposed amid heightened tensions in April–May 2025.

Air India, meanwhile, has projected annual losses of around $600 million, if the restrictions persist and has approached the government for compensation. In addition, Islamabad International Airport’s airspace will remain closed every day for two hours until August 14 under NOTAM A0510/25.

Flights to Lahore and other northern regions will be suspended between ground level and FL210 from 11 am to 1 pm, halting both departures and arrivals during this period.