By Aditi Shah, Joanna Plucinska and Tim Hepher

ISTANBUL (Reuters) -The diversion of a U.S.-built Air India jetliner to Russia with engine problems has thrust industry tensions surrounding Russian airspace into the spotlight - just a day after the head of a major American carrier predicted an almost identical scenario.

A global industry meeting ended on Tuesday with carriers at odds over the use of Russia as a pivotal crossing point in the global air transport network, with United Airlines citing trade concerns but India's flag carrier defending it.

A Russian ban on some foreign carriers using its airspace, in retaliation for Western sanctions over the Ukraine war, has redrawn air routes and upset business models for some airlines that now need to fly around the world's largest country.

The potential impact is far-reaching because one flight between Europe and Asia generates three throughout the network as passengers take connecting flights, according to Brussels-based air traffic control body Eurocontrol.

While U.S., European and Japanese carriers have stopped flying over Russia, Air India and some Gulf-based and Chinese airlines continue to do so, making flying times shorter and giving them a cost edge over competitors.

"At Air India, we operate according to the ambit of what is provided to us by the nation of India and not all nations agree," CEO Campbell Wilson said at the International Air Transport Association's (IATA) annual meeting this week.

"So there are going to be different outcomes as a consequence," Wilson told the conference in Istanbul.

Air India, which is revamping itself under new owner Tata Group, has been rapidly growing its international presence with new non-stop flights to Europe and the United States.

Being able to use Russian airspace has come as a boon as it looks to capture a bigger share of the market.

Scott Kirby, CEO of United Airlines, said the U.S. carrier had been forced to stop operating several flights to India for economic or aircraft range reasons due to the detour required.

"Its clearly a big impact to us," he said.

And with superpower tensions near Cold War levels, he sketched out a scenario remarkably similar to the incident which played out in Russia's Far East just 24 hours later.

"What's going to happen if an airline lands in Russia with some prominent U.S. citizens on board? That is a potential crisis in the making," Kirby warned on Monday.

"I think we should solve it before the crisis happens. It may require the crisis before it gets solved but I think we should probably solve before the crisis," he said.

The disagreements put a spotlight on the strategic and geographic importance of Russia in the global aviation world as it offers the most direct flying path between the West and the East - an important factor for carriers to keep costs down.

An influential trade body with roots in the development of civil aviation after World War Two, IATA has been at the forefront of efforts to create a seamless global architecture for civil aviation.

But international reaction to Russia's invasion of Ukraine has exposed differences between its members over the use of Russia's air corridors.

IATA Director General Willie Walsh called for an opening up of Russian airspace.

"What we would like to see is everybody using Russian airspace. I'm clear that it's not a security or a safety issue," Walsh told Reuters.

LEVEL PLAYING FIELD

Airlines in the United States have been in talks with the government to discourage carriers landing on U.S. soil after flying via Russian airspace, which generates fees for Moscow.

Western carriers are particularly vexed about what they see as their potential competitive disadvantage to Chinese airlines as the world's second-largest economy reopens and outbound travel picks up.

But airlines that can are unlikely to stop using Russian airspace after this diversion, said James Halstead, managing partner at Aviation Strategy.

"It is the hand you are dealt," said Vinod Kannan, CEO of India's Vistara, a joint venture between Tata Group and Singapore Airlines, referring to the overflights.

"It depends on the law of the land. As long as you're not violating any of it, it's not an issue," he told reporters.

Air India's Wilson said the world had seen the consequences of aviation not being able to connect economies and cultures during the pandemic.

"It's a sensitive geopolitical issue and applying geopolitics to the aviation industry that does so much to link the world, I'm not sure that's a link that should be made."

(Reporting by Aditi ShahEditing by Mark Potter)