India registers 15-20% decline in tourist traffic, aviation to hit loss of Rs 18,000 crore

India’s aviation, tourism and hospitality sectors are set to hit hard due to the West Asia conflict suffering as much as 15 to 20 per cent decline in inbound tourist traffic and an estimated net loss of Rs 18,000 crore for the aviation industry.

A report released by the PHD Chamber of Commerce and Industry (PHDCCI), titled “Impact of the West Asia Conflict on India’s Tourism, Aviation & Hospitality Sectors,” highlighted widespread disruptions across key segments.

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India’s tourism and hospitality sector, which contributes nearly 8 per cent to GDP and supports over 40 million jobs, had witnessed a strong recovery in 2025. However, fresh geopolitical tensions in early 2026 have introduced new volatility.

“These disruptions have increased flying time by 2–4 hours on key routes, leading to a sharp rise in fuel consumption and operating costs. Industry estimates indicate that fuel accounts for 35-40% of airline operating costs and the ongoing situation has further strained airline profitability. The disruption of Middle East air corridors which is among the busiest global transit routes has also reduced connectivity efficiency and increased airfares,” the report said.

The report highlighted a 15-20 per cent decline in inbound tourist traffic, particularly in leisure travel, as global travellers adopt a cautious approach amid geopolitical uncertainty. Further, the outbound travel trends have also shifted, with Indian travellers preferring short-haul destinations such as Thailand, Singapore and Vietnam, while long-haul routes have seen moderation.

The PHDCCI report further said the restaurant and food services sector is also facing challenges, with around 10 per cent of restaurants reported to have shut down and business declining by Rs 79,000 crore per month.

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, contributing 20-30 per cent of revenues, are providing some stability, profitability remains under pressure, particularly for small and mid-sized operators, it highlighted.

The report further suggested several measures to mitigate the impact, including diversifying air routes, improving connectivity, rationalising taxation on aviation turbine fuel and hospitality services, and providing financial support to MSMEs.