Industry body PHDCCI on Thursday said the West Asia conflict has impacted India’s aviation sector the most with a 15–20% dip in inbound tourist traffic and a net loss of Rs 18,000 crore to the industry.Releasing its report ‘Impact of the West Asia Conflict on India’s Tourism, Aviation and Hospitality Sectors’, the group said the current geo-political situation has created significant disruptions across aviation, inbound tourism, hospitality and restaurant segments of the country.”India’s tourism and hospitality sector, which contributes nearly 8 percent to GDP and supports over 40 million jobs, is once again facing external shocks due to escalating geopolitical tensions. While the sector had witnessed a strong V-shaped recovery in 2025, with branded hotel inventory nearing 2,00,000 rooms and domestic aviation traffic crossing 5 lakh passengers per day, the West Asia conflict has introduced fresh volatility,” it said.The report said airlines are facing flight cancellations, airspace restrictions and significant rerouting of international flights. It said 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 also highlighted a 15–20% decline in inbound tourist traffic, particularly in leisure travel, as global travelers adopt a cautious approach amid geopolitical uncertainty.”Outbound travel patterns have also shifted, with Indian travellers increasingly preferring short-haul destinations such as Thailand, Singapore and Vietnam, while long-haul and transit-dependent routes have seen moderation due to geopolitical risks,” it stated.The report, however, said the hospitality sector continues to remain resilient, supported by strong domestic travel demand. Despite stable occupancy levels driven by domestic tourism, profitability remains under pressure, it said.According to the PHD Chamber of Commerce and Industry (PHDCCI), the restaurant and food services sector is also experiencing a mixed impact.”The sector is facing input cost inflation in the range of 10–15%, driven by higher prices of imported ingredients, logistics and energy. Premium dining and hotel-based restaurants in key tourism hubs have seen softening international customer footfall, while domestic demand and food delivery contributing 20–30% of revenues for many organized players continue to provide stability,” it said.Despite these challenges, domestic tourism continues to act as the primary growth engine, cushioning the sector against global disruptions. Travel trends such as revenge travel, staycations, bizcations and experiential dining are sustaining demand across hotels, airlines and restaurants.The industry body also outlined several key policy recommendations like diversifying international air routes and reducing dependence on conflict-prone regions, enhancing bilateral air service agreements to improve connectivity and rationalizing taxation across aviation turbine fuel (ATF), hospitality and F&B sectors to reduce cost pressures.The report also called for targeted financial support and easier credit access for MSMEs (micro, small and medium enterprises), which form a significant part of the tourism and restaurant ecosystem.It underlined accelerating infrastructure development, improving multimodal connectivity and promoting domestic tourism circuits to sustain demand. Strengthening digital travel facilitation, visa processes and destination marketing in alternative global markets is also highlighted as critical to offset declines in traditional inbound segments.For the restaurant sector, the report emphasized the need to stabilize supply chains, reduce compliance burdens, and support local sourcing ecosystems.The report concluded that while the West Asia conflict has introduced short-term disruptions, it also presents an opportunity for India to build a more resilient, diversified and self-reliant tourism ecosystem.