User blog comment:IamJakuhoRaikoben/Chapter 403: Erza vs. Kyouka, Review./@comment-66.91.222.27-20141008011918/@comment-7418318-20141008093359

The problem with blindsight is that it relies on other senses instead of sight. Like a blind person getting much better hearing and sense of touch to the extend that they can navigate by echos bouncing off of things to a certain degree.

If ALL your senses are deactivated, that won't work. No amount of instinct will change that.

Though there is one possibility I've remembered that might explain Erza's perception. Kyouka never mentioned anything about deactivating Erza's sense for magic. Maybe Erza is somehow perceiving her surroundings through that sense.

Much like Tousen was able to perceive his surroundings through Reiatsu in Bleach or how Adie was able to see with magic in the Sword of Truth books.

With the enormous amount of curse power that Kyouka has right now, I wouldn't be surprised if she's very easy to locate through such a magical sense. After all pretty much the entire Tenrou Team was able to feel Gildarts' burst of power and the general direction. Now Kyouka is using curse instead of magic, but the concentration of energy might still be something that can be felt by Mages.