Relations between India and Pakistan have worsened rapidly after a deadly shooting in Kashmir, leading to emerging economic consequences for both nations.
The killing of 26 civilians in Indian-administered Kashmir — the deadliest such attack in 25 years — triggered widespread outrage across India.
India accused Pakistan of supporting “cross-border terrorism” and responded with symbolic diplomatic measures, which Islamabad rejected while launching tit-for-tat actions.
Pakistan escalated the situation by halting trade with India and closing its airspace to Indian airlines, moves expected to have minor but costly impacts.
Aviation experts say Pakistan’s airspace closure will result in Indian flights to Europe, Central Asia, and North America taking up to two hours longer.
Air India is expected to be the most affected, with longer routes increasing fuel costs, additional stops, and higher crew and landing expenses.
Experts predict that if restrictions persist beyond six months, ticket prices could rise by over 35% for Middle Eastern routes and more than 45% for European flights.
During past airspace closures, such as in 2019, Indian airlines suffered significant financial losses amounting to nearly 5.5 billion rupees.
Meanwhile, Pakistan’s halt of direct trade with India is unlikely to cause major disruption, given the historically limited economic ties between the two countries.
India exported less than US$450 million worth of goods to Pakistan in the past year, mainly pharmaceuticals and sugar.
However, Pakistan’s suspension of third-country trade routes could affect a much larger volume of informal trade, estimated at around US$10 billion.
Through indirect channels like the UAE and Singapore, Pakistan typically imports Indian goods such as chemicals, pharmaceuticals, and cotton, while India receives items like Himalayan pink salt and dry fruits.
Analysts hope for a de-escalation of tensions, warning that the ongoing fallout will strain airline finances and complicate regional trade further.
