The report, titled “Impact of the West Asia Conflict on India’s Tourism, Aviation & Hospitality Sectors”, indicates that the aviation industry has been the hardest hit, with airlines experiencing flight cancellations, airspace restrictions, and major rerouting of international flights.
These disruptions have extended flying times by 2-4 hours on major routes, leading to increased fuel consumption and higher operational costs.
Estimates from the industry suggest fuel constitutes 35-40% of airline operating expenses, and the current situation has further jeopardized airline profitability. The disruption of critical air corridors in West Asia, a vital global transit point, has diminished connectivity efficiency and driven up airfares, according to the report.
The overall impact on the industry, including the projected ₹18,000 crore net loss, has been evaluated by the rating agency Icra through feedback from stakeholders, alongside sectoral trends, booking habits, cancellations, and operational cost issues (especially those related to aviation), PHDCCI stated.
Inbound tourist traffic has decreased by 15-20%, particularly affecting leisure travel, as global travelers adopt a more cautious stance in light of geopolitical uncertainties, the report explains.
The findings are based on input from the industry, collected through structured interviews and questionnaires targeting key stakeholders.
The assessment spans from February 28, 2026, marking the beginning of the West Asia conflict and its subsequent effects on travel sentiment, flight operations, and inbound tourism trends.
The restaurant and food services sector is experiencing varied impacts. Industry estimates, aligned with insights from the National Restaurant Association of India (NRAI), indicate input cost inflation ranging from 10-15%, largely due to rising prices of imported ingredients, logistics, and energy costs.
Sagar Daryani, President of the National Restaurant Association of India (NRAI), remarked that the magnitude of the disruption has escalated into a widespread operational challenge.
“The ongoing LPG supply disruption has led to a serious operational crisis for the restaurant industry. Approximately 10% of restaurants have temporarily closed, while 60-70% of establishments have transitioned to induction cooking, alternate fuels, reduced menus, or shorter operating hours to cope with limited supplies,” Daryani noted.
The report highlights that the economic implications of this disruption are considerable.
A 15-20% slowdown in throughput, as currently observed, corresponds to an approximate ₹2,650 crore decrease in daily economic activity, or nearly ₹79,000 crore monthly, representing a significant economic disruption to the food services ecosystem, as stated in the report.
Beyond operational and financial challenges, concerns about employment stability within the sector also loom large.
The restaurant industry employs over 8.5 million individuals, making it one of the largest job creators in India’s service economy.
“Prolonged supply disruptions could potentially lead to job losses for 5-7 lakh people, along with hiring freezes and postponed expansion plans, especially among smaller operators who are more susceptible to cost and supply fluctuations,” it added.
The report puts forth several key policy recommendations to mitigate the impact and bolster the resilience of the hospitality sector.
These recommendations include diversifying international air routes to lessen dependency on conflict-prone areas, enhancing bilateral air service agreements to improve connectivity, and rationalizing taxation across aviation turbine fuel (ATF), hospitality, and F&B sectors to alleviate cost pressures.
It also calls for targeted financial support and improved credit access for MSMEs, which play a crucial role in the tourism and restaurant ecosystem.
Patterns in outbound travel have shifted, with Indian travelers increasingly favoring short-haul destinations such as Thailand, Singapore, and Vietnam, while long-haul and transit-dependent routes have seen a decrease due to geopolitical risks, as noted by the PHDCCI report.
The report advocates for the establishment of a coordinated tourism communication framework involving industry bodies and government agencies, aimed at delivering unified messaging to international markets during disruptions.
Despite ongoing challenges, the country’s hospitality sector remains resilient, buoyed by strong domestic travel demand. However, the report notes that margin pressures persist due to rising energy costs, increased input prices, and fluctuating international demand, particularly for premium and business hotels, which rely heavily on foreign travelers.
While domestic tourism has sustained stable occupancy levels, profitability continues to face challenges, the report mentioned.
International tourism demand is anticipated to gradually stabilize in the next 6-12 months as aviation networks adapt to changing global conditions and airlines restore capacity on long-haul routes, the report concluded.
