West Asia Conflict Impact on India: ₹18,000 Crore Aviation Loss, 10% Restaurants Shut — PHDCCI Report Explained

From costlier flights and closed restaurants to shifting travel plans — a PHDCCI report backed by ICRA data lays out how the West Asia conflict since February 2026 is reshaping India’s aviation, tourism and hospitality sectors.

North Desk Bureau

Chandigarh, April 19

Your flight to London via Dubai is longer and costlier. The neighbourhood restaurant has hiked prices or shut shop. The NRI cousin flying in from Canada had to reroute. And that foreign tourist group that was supposed to fill Shimla’s hotels this season? Cancelled.

These are not random inconveniences. They are the traceable, documented fallout of the West Asia conflict — a war that broke out in early 2026 and has since rippled into India’s aviation, tourism and hospitality economy in ways that a new industry report has now put hard numbers to.

The PHD Chamber of Commerce and Industry (PHDCCI), in partnership with rating agency ICRA, released its report — ‘Impact of the West Asia Conflict on India’s Tourism, Aviation & Hospitality Sectors’ — this week. North Desk breaks down what it says and what it means for ordinary travellers, workers and businesses in North India.

The Numbers at a Glance

Before diving into the detail, here is what the report concludes:

• ₹18,000 crore — estimated net loss to India’s aviation industry
• 15–20% — decline in inbound foreign tourist arrivals
• ₹79,000 crore per month — reduction in restaurant and food services business
• 10% — share of restaurants that have temporarily shut down
• 5–7 lakh — potential job losses threatened in the food services sector
• 2–4 hours — extra flying time added to key international routes due to rerouting

Why West Asia? What Changed After February 28?

The report’s assessment covers the period from February 28, 2026 onwards — the date it marks as the onset of the West Asia conflict and its subsequent impact on travel sentiment, flight operations and inbound tourism flows. The findings are based on industry inputs collected through structured interviews and questionnaires with key stakeholders.

The Middle East — specifically the airspace over Iran, Iraq, Yemen and the Gulf — is one of the busiest transit corridors in global aviation. Emirates, Etihad and Qatar Airways, which carry a huge share of India’s international traffic, operate hubs in Dubai, Abu Dhabi and Doha. For passengers from Amritsar, Chandigarh and Delhi flying to Europe, North America, East Africa or Australia, these are the standard transit points.

When that airspace becomes contested or restricted, the entire chain breaks.

Aviation: The Hardest Hit

The ₹18,000 crore net loss to the aviation industry has been assessed by rating agency ICRA, examining stakeholder feedback alongside sectoral trends, booking patterns, cancellations and operational cost pressures.

The mechanism is straightforward: airlines faced flight cancellations, airspace restrictions and significant rerouting of international flights. These disruptions increased flying time by 2–4 hours on key routes, resulting in a sharp rise in fuel consumption and operating costs. Fuel accounts for 35–40 per cent of airline operating costs, and the disruption of West Asia air corridors — among the busiest global transit routes — has also reduced connectivity efficiency and pushed airfares higher.

The employment impact is already showing. One airline reduced around 500 people from a workforce of 6,800 — an 8 per cent cut — though others are holding on in anticipation of a rebound.

For North India specifically, the Amritsar international airport, which has direct and one-stop flights to UK, Canada and Gulf destinations, has seen schedule disruptions. The Chandigarh airport, which relies heavily on Gulf carriers for NRI traffic, has been similarly affected.

Inbound Tourism: Foreign Visitors Staying Away

The impact has been geographically uneven, with Southern India witnessing a sharper decline due to its higher dependence on Gulf-linked air routes. Overall, the decline in inbound tourism is around 10–15 per cent, though it is somewhat skewed by the fact that the inbound tourism season was winding down anyway. MICE — meetings, incentives, conferences and exhibitions — events have taken a particularly sharp hit.

The leisure travel segment has been equally cautious. The report records a 15–20 per cent decline in inbound tourist traffic overall, as international travellers avoid booking trips that require transiting through an active conflict zone.

For Himachal Pradesh and Punjab, which attract European trekkers and spiritual tourists respectively, a drop in foreign arrivals in the April-June shoulder season compounds an already competitive tourism market.

Indian Travellers: Heading East, Not West

The conflict has not just stopped foreigners from coming in. It has rerouted how Indians travel out.

Travellers are now moving towards East Asian destinations. Japan is issuing around 600 visas daily from Delhi and Mumbai, while Thailand and Vietnam are seeing increased traffic. Long-haul routes to Europe and West Africa, which depend on Middle East transit hubs, have seen a fall in bookings.

For the large Punjabi diaspora — many of whom travel regularly between Canada, the UK and Chandigarh or Amritsar — longer flight times and higher fares are now a practical reality, not a headline.

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Restaurants: The Overlooked Crisis

The report’s sharpest numbers are not about flights — they are about food.

The Indian food services market, valued at ₹5.69 lakh crore in 2024 and expected to reach ₹6.46 lakh crore in 2026, translates to approximately ₹17,700 crore in daily economic activity. A 15–20 per cent slowdown in throughput corresponds to an estimated ₹2,650 crore reduction in daily economic activity — or nearly ₹79,000 crore per month — representing a significant economic shock to the food services ecosystem.

The trigger? LPG. The West Asia conflict has disrupted global LPG supply chains, hitting restaurants — which depend on commercial LPG cylinders — particularly hard.

National Restaurant Association of India president Sagar Daryani said the LPG supply disruption has created a serious operational crisis. Nearly 10 per cent of restaurants have temporarily shut down, while 60–70 per cent of establishments have shifted to induction cooking, alternate fuels, reduced menus or shorter operating hours to manage limited supplies.

The restaurant industry directly employs over 8.5 million people. Prolonged supply disruptions could result in 5–7 lakh potential job losses, alongside hiring freezes and delayed expansion plans, particularly among small and medium-sized operators who are more vulnerable to cost and supply volatility.

In Chandigarh, Ludhiana and Amritsar, where the dhaba and restaurant economy is a substantial employer, this is not an abstract statistic.

Hotels: Holding On, But Margins Squeezed

The hospitality sector is the most resilient of the three segments. Domestic tourism — pilgrimage, weddings, staycations — is keeping occupancy stable. But profit margins are shrinking because of rising energy costs and the drop in the high-paying foreign traveller.

Premium hotels in tourist hubs — including those in Shimla, Manali and Amritsar’s heritage circuit — are more exposed, given their dependence on international guests.

The Silver Lining: Indians Are Travelling Within India

The report is clear that domestic tourism is the buffer absorbing the shock. Trends like revenge travel, staycations, bizcations and experiential dining have sustained demand. Anil Parashar, Chair of PHDCCI’s Tourism & Hospitality Committee, noted that domestic tourism has helped the country significantly, and expressed cautious optimism — saying that once the war ends, sentiment will return and travellers will bounce back. He added, however, that infrastructure recovery in parts of the Gulf — refineries, oil wells — could take up to six months even after hostilities end.

What the Industry Is Asking For

The report lays out a clear list of policy demands. These include rationalising the tax on aviation turbine fuel (ATF) — a long-standing demand — diversifying air routes away from conflict-prone regions, easier credit for tourism MSMEs, and a coordinated government-industry communication framework for international tourism markets during crisis periods.

For restaurants specifically, it calls for supply chain stabilisation, reduced compliance burdens and support for local sourcing to reduce import dependence.

The Bottom Line

A conflict thousands of kilometres from India has made your flight pricier, your restaurant bill higher, and the foreign tourist who was coming to Punjab’s heritage sites or Himachal’s mountains is simply not arriving. The ₹18,000 crore aviation loss is the headline number, but the ₹79,000 crore monthly restaurant impact is the one that hits closer to the ground — and to the 8.5 million people whose livelihoods depend on India’s food services industry staying open.