The report, titled “Impact of the West Asia Conflict on India’s Tourism, Aviation & Hospitality Sectors,” noted that the aviation industry has been hit hardest, with airlines dealing with flight cancellations, airspace restrictions, and notable rerouting of international flights.
These disruptions have caused an increase in flying time by 2-4 hours on major routes, leading to a significant rise in fuel consumption and operational costs.
Industry estimates suggest that fuel represents 35-40% of airline operating costs, and the continuing situation has placed additional strain on airline profitability. The disruptions to the West Asia air corridors—among the busiest global transit routes—have reduced connectivity efficiency and driven up airfares, the report indicated.
The overall industry impact, including the estimated ₹18,000 crore net loss, has been evaluated by rating agency Icra through stakeholder feedback, sector trends, booking patterns, cancellations, and operational cost pressures, particularly within the aviation sector, according to PHDCCI.
Inbound tourist traffic has dropped by 15-20%, especially in leisure travel, as global travelers adopt a more cautious approach amid geopolitical uncertainties, as noted in the report.
The data derives from industry inputs collected via structured interviews and questionnaires with key stakeholders.
The assessment spans from February 28, 2026, onward, marking the start of the West Asia conflict and its impact on travel sentiment, flight operations, and inbound tourism flows.
The restaurant and food services sector is also experiencing a varied impact. According to industry estimates fueled by insights from the National Restaurant Association of India (NRAI), this sector faces input cost inflation of 10-15%, driven by rising prices for imported ingredients, logistics, and energy.
Sagar Daryani, President of the National Restaurant Association of India (NRAI), stated that the extent of the disruption has evolved into a nationwide operational challenge.
“The persistent LPG supply disruption has created a critical operational crisis for the restaurant industry. Nearly 10% of restaurants have temporarily closed, while 60-70% of establishments have shifted to induction cooking, alternative fuels, reduced menus, or shorter operating hours to cope with limited supplies,” Daryani remarked.
The economic implications of these disruptions are significant, according to the report.
A 15-20% slowdown in throughput, as currently observed, corresponds to an approximate ₹2,650 crore reduction in daily economic activity, equating to nearly ₹79,000 crore per month—a considerable economic shock to the food services ecosystem, according to the report.
In addition to operational and financial concerns, the disruption brings about potential instability in employment across the sector.
With the restaurant industry directly employing over 8.5 million individuals, it stands as one of the largest job creators within India’s service economy.
“Extended supply disruptions could lead to 5-7 lakh potential job losses, along with hiring freezes and postponed expansion plans, especially among small and medium-sized operators who are more susceptible to cost and supply fluctuations,” it added.
To address the impact and enhance the resilience of the hospitality sector, the report suggests several key policy recommendations.
These include diversifying international air routes to lessen reliance on conflict-prone regions, improving bilateral air service agreements to enhance connectivity, and rationalizing taxation across aviation turbine fuel (ATF), hospitality, and F&B sectors to alleviate cost pressures.
The report also advocates for targeted financial support and easier credit access for MSMEs, which constitute a crucial part of the tourism and restaurant ecosystem.
Outbound travel preferences have shifted as Indian travelers increasingly opt for short-haul destinations such as Thailand, Singapore, and Vietnam, while long-haul and transit-dependent routes have experienced moderation due to geopolitical risks, according to the PHDCCI report.
The report emphasizes the need for developing a coordinated tourism communication framework that includes industry bodies and government agencies, enabling unified messaging to international markets during disruptions.
While the country’s hospitality sector remains resilient, backed by strong domestic travel demand, the report highlights margin pressures due to rising energy costs, increased input prices, and fluctuating international demand—especially in premium and business hotel segments that depend on foreign travelers.
Despite stable occupancy rates driven by domestic tourism, profitability continues to face challenges, it noted.
International tourism demand is anticipated to gradually stabilize over the next 6-12 months as aviation networks adapt to evolving global conditions and airlines restore capacity on long-haul routes, the report concluded.
