Air India expects to face around $600 million in additional costs if a ban from Pakistan's airspace lasts for a year, and has asked the federal government to compensate it for the hit, a company letter seen by Reuters shows.

Pakistan had closed its airspace for Indian aircraft and airlines after New Delhi’s strong diplomatic moves in response to the terror attack.

India has shut its airspace to Pakistani airlines, India Today reported on Wednesday, days after Pakistan did the same to Indian airlines amid increased tensions following the killing of 26 men in an attack on tourists in Kashmir.