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The Air Balloon gives the holder an immunity to all Ground-type moves. It pops once the user is hit by an attacking move. Indirect damage will not pop the Air Balloon, and neither will Ground-type moves. The user is also not affected by Spikes or Toxic Spikes. The Air Balloon's effect is negated when Gravity is in effect.
The Air Balloon is a great item for competitive use, especially on any Pokemon that is ordinarily crippled by Ground-type attacks. In particular, it is commonly used on Heatran, negating its 4x weakness to Ground. It is also good on sweepers with Ground as one of their few weaknesses, such as Terrakion and Lucario in OU, enabling them to grab a free turn in order to set up while the opponent is forced to break the Balloon. Air Balloon does not prevent Stealth Rock damage, however, and using Air Balloon does forfeit your ability to carry conventional items such as Life Orb or Choice Band, so your Pokemon can lose out on extra power. It is also less useful on defensive Pokemon, who will be taking hits regardless and will appreciate the recovery from Leftovers far more than what is usually a single free turn.
Battle Subway, 48 BP.