New Delhi: Air India’s flight cuts triggered by the Iran-US conflict and Pakistan’s airspace ban are benefiting foreign carriers such as Lufthansa Group and Cathay Pacific, which are expanding services in India, one of the world’s fastest-growing aviation markets.
With routes through the Middle East disrupted and some passengers avoiding Gulf transit hubs due to regional tensions, international airlines are capitalising on strong travel demand from India to Europe and North America, where fares have surged.
Data from aviation analytics firm OAG showed foreign carriers accounted for 58.4% of India-origin international scheduled flights during March-May, up from 51.2% a year earlier. During the same period, Air India operated 6,404 international flights, down 17.5% year-on-year. The airline also announced major cuts on European and North American routes for June-August.
The disruptions have dealt a setback to Air India’s efforts to establish itself as a stronger global carrier through fleet expansion, cabin upgrades and additional non-stop international services.
Linus Benjamin Bauer, global managing partner at aviation consultancy BAA & Partners, said the ongoing conflict had disrupted nearly every aspect of Air India’s transformation strategy.
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Owned by Tata Group and Singapore Airlines, Air India has not posted a profit since its privatisation in 2022. According to sources familiar with the matter, the airline group is expected to record losses exceeding $2.12 billion in fiscal 2025-26, with international operations contributing more than 60% of total revenue.
In an internal memo dated May 1, outgoing Air India CEO Campbell Wilson said rising jet fuel prices, airspace closures and longer flight paths had made many international services unprofitable.
Pakistan has barred Indian airlines from using its airspace since April 2025 amid diplomatic tensions, forcing Indian carriers to take longer and costlier routes.
International travel demand from India has remained strong, despite recurring criticism of Air India’s ageing fleet. However, the carrier’s U.S. operations were hit hardest, with scheduled flights declining 77.4% year-on-year in March-May, according to Cirium route data. Flights to Europe fell 5.1% during the same period.
Meanwhile, foreign airlines increased their India operations. Swiss International Air Lines, owned by Lufthansa, scheduled 247 flights from India in March-May, up 39% from a year earlier, driven largely by expanded Delhi-Zurich operations. KLM scheduled 294 flights, marking a 19.5% increase.
Swiss said it introduced a second daily Delhi-Zurich service amid strong demand from Indian travellers flying to Europe and the United States. KLM also reported higher passenger traffic from India during the Middle East crisis.
Cathay Pacific scheduled 588 flights between India and Hong Kong during March-May, up 19% year-on-year. Cathay CEO Ronald Lam said many Indian passengers who previously transited through Gulf hubs were now travelling to the United States via Hong Kong.
Further expansion by foreign carriers may be restricted by bilateral flying rights agreements, which have also limited the growth of Gulf airlines in India.
Several airlines have also intensified marketing efforts in India. Lufthansa recently illuminated Mumbai’s Bandra-Worli Sea Link with its branding as part of a promotional campaign.
Air India’s challenges deepened after Dubai introduced limits in March on the number of daily flights foreign airlines could operate into its airports.
The carrier has also faced increased travel times on U.S.-bound routes due to airspace restrictions, with some journeys taking nearly five hours longer.
On Wednesday, Air India suspended Delhi-Chicago flights and reduced several other U.S. services for June-August. The airline had already halted Delhi-Washington and Bengaluru- and Mumbai-San Francisco routes last year, allowing American Airlines and United Airlines to strengthen their market share on India-U.S. sectors.
Ravi Gosain, president of the Indian Association of Tour Operators, said passengers still chose Air India when fares were lower, but preferred foreign carriers when ticket prices were similar and flight durations were longer.
