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.

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.

Tensions between India and Pakistan have escalated further after a top Pakistani official claimed early Wednesday to have “credible intelligence” that New Delhi will carry out a military action against Islamabad within the next two days.

Pakistan's government has said it has "credible intelligence" that India intends to launch military action soon after days of escalating tensions.

Pakistan says it has “credible intelligence” that India is planning to attack it within days over last week's deadly attack in Indian-controlled Kashmir

U.S. Vice President JD Vance said on Thursday Washington hoped Pakistan would cooperate with India to hunt down Pakistan-based militants, and that India's response to the recent Islamist militant attack in India-administered Kashmir does not lead to a broader regional conflict.

Tensions between India and Pakistan are fueling concerns about the potential for conflict between the two nuclear-armed nations.