The ongoing conflict in West Asia has significantly affected India’s aviation, tourism and hospitality sectors, with inbound tourist arrivals declining by 15–20 per cent and the aviation industry facing an estimated net loss of around Rs 18,000 crore, according to a report by the PHD Chamber of Commerce and Industry.
The report, titled “Impact of the West Asia Conflict on India’s Tourism, Aviation & Hospitality Sectors,” said the geopolitical tensions have triggered widespread disruptions across key segments, even as domestic demand continues to provide some stability.
India’s tourism and hospitality sector, which contributes nearly 8 per cent to GDP and supports over 40 million jobs, had shown a strong recovery in 2025. However, fresh geopolitical instability in early 2026 has created renewed uncertainty, the report noted.
The aviation sector has been the worst affected, with airlines facing flight cancellations, airspace restrictions and rerouting of international flights. These disruptions have increased flying time by two to four hours on several international routes, leading to higher fuel consumption and operational costs. Fuel already accounts for 35-40 per cent of airline operating expenses, further squeezing margins.
The report highlighted that disruption of key Middle East air corridors, among the busiest global transit routes, has reduced connectivity efficiency and led to higher airfares.
Also read: Around 1 million Indians return home amid West Asia conflict: MEA
It also noted a shift in travel patterns, with Indian outbound travellers increasingly preferring short-haul destinations such as Thailand, Singapore and Vietnam, while long-haul travel has seen moderation amid uncertainty.
In the hospitality sector, domestic travel demand continues to support occupancy levels; however, rising energy costs, higher input prices and fluctuating international demand have pressured margins, particularly in premium and business hotel segments.
The restaurant and food services industry is also under strain, with around 10 per cent of outlets reported to have shut down and monthly business declining sharply, the report said. Input costs have risen by 10–15 per cent due to higher prices of imported ingredients, logistics and energy.
While domestic demand and food delivery services, contributing 20-30 per cent of revenues, are providing some cushion, profitability remains under pressure, especially for small and medium operators.
Despite the disruptions, the report said domestic tourism continues to act as a key stabilising factor, driven by staycations, experiential travel and dining trends.
It recommended diversification of air routes, improved connectivity, rationalisation of aviation fuel and hospitality taxation, and financial support for MSMEs. Strengthening infrastructure and promoting domestic tourism circuits were also suggested as key policy measures.
The report concluded that while the conflict has created short-term disruptions, it also presents an opportunity to build a more resilient and diversified tourism ecosystem in India.
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