Aug 11 (Reuters) - Air India said on Monday it would

stop services between the capital cities of India and the U.S.

from September 1, citing aircraft shortage due to the planned

upgrades to its ageing Boeing ( BA ) planes and the closure of

Pakistan's airspace.

The suspension of services between New Delhi and

Washington, D.C., marks the latest setback for Air India, which

is facing heightened regulatory scrutiny after a June crash in

Ahmedabad killed 260 people.

The planned shortfall in Air India's fleet and continued

closure of airspace over Pakistan have impacted the airline's

long-haul operations, leading to longer flight routings and

increased operational complexity, the carrier said.

The airline has undertaken a $400 million retrofit

programme to upgrade its fleet.

It, however, sees the Pakistan airspace ban costing it

$600 million over 12 months, Reuters had earlier

reported

.

India and Pakistan

closed their respective airspaces

to each other days after relations between the arch-rivals

nosedived following

a fatal attack

on civilians in Indian Kashmir, which also sparked the

worst

fighting between the neighbours in decades.

New Delhi has blamed Islamabad for the attack,

accusations which Islamabad has denied.

Air India said its flyers will have options to choose

flights to Washington, D.C., with layovers at New York, Newark,

Chicago and San Francisco with the airline's interline partners

Alaska Airlines, United Airlines and Delta Air

Lines ( DAL ).

(Reporting by Hritam Mukherjee in Bengaluru; Editing by Anil

D'Silva)