Iran war threatens $11.7 trillion global travel industry as passengers get caught in crossfire

Zoey Gong, a Chinese medicine food therapist, was days away from boarding an Emirates flight from Paris to Shanghai via Dubai, United Arab Emirates, when the U.S. and Israel attacked Iran on Saturday.

Gong, 30, had her flight plans derailed as a result, and she told CNBC that she had to pay $1,600 to get to Shanghai, more than double the price of her original ticket.

She’s one of millions of travelers swept up in war and other conflicts from Iran to Mexico this year, problems that are threatening the global tourism industry that’s worth an estimated $11.7 trillion to the world’s economy, according to industry group World Travel & Tourism Council. It’s showing that people who are far from falling missiles, drone attacks and other geopolitical flashpoints aren’t immune to ripple effects.

The U.S.-Israel attack on Iran set off massive aviation, travel and safety crises.

More than a million people around the world were stranded because of airspace closures that have grounded over 20,000 flights since Saturday, according to aviation data firm Cirium. Some were also stuck on cruise ships. Inquiries for more expensive “cancel for any reason” travel insurance policies surged 18-fold this week, said Chrissy Valdez, senior director of operations for Squaremouth, an online insurance marketplace.

Since Saturday, Iran has launched retaliatory attacks on the United Arab Emirates — home to Dubai International Airport, the world’s busiest for international passenger traffic, according to Airports Council International — as well as Qatar, Jordan, Israel and Cyprus. The back-and-forth attacks have left airlines with little recourse to repatriate travelers.

Days after the attack, the U.S. State Department told citizens in a large part of the region to leave immediately, with few options at hand. The department said it is organizing charter flights for U.S. citizens who want to return from Saudi Arabia, Israel, UAE and Qatar.

“This has spiraled into an aviation quagmire,” said Henry Harteveldt, a former airline executive and founder of travel consulting firm Atmosphere Research Group.

Other sectors of the travel industry are also dealing with the war’s impact. Debris rained down near Accor‘s Fairmont The Palm Hotel in Dubai over the weekend. The company said four people were injured, but none were guests, visitors or staff. Meanwhile the iconic Burj Al Arab hotel had a fire earlier this week after it was hit by debris from an Iranian drone.

MSC Cruises’ more than 6,300-passenger MSC Euribia ship has been stranded in Dubai and the company is trying to get flights for affected guests, it said. “We are requesting priority for our guests from our partners,” the company said in a statement.

“In order to speed up the repatriation, we are working on other options such as chartering flights” from Dubai, Abu Dhabi, UAE, or Muscat, Oman, but the situation on board “remains calm,” the cruise company said.

Earlier this week, MSC said it would cancel its remaining sailings from Dubai for the winter. “We understand that this will be disappointing, but we are sure that guests impacted will understand this decision,” it said.

Putting aside the Covid-19 health crisis that ground most international travel to a halt, Harteveldt called this week “the most chaotic event we’ve seen frankly since 9/11 when the U.S. chose to close its airspace. We haven’t seen anything that has had such a long and geographically widespread impact on travel.”

The Iran war is the most severe military conflict this year, but it’s one of a series of obstacles that have threatened travel demand and profits for hotels, airlines and cruise companies, as well as local economies that depend heavily on travel, especially international tourists, who tend to spend more than local visitors.

Three days into 2026, the U.S. struck Venezuela and captured its president, Nicolás Maduro, and his wife, Cilia Flores. The attack prompted the U.S. to close airspace throughout the Caribbean, stranding travelers, many at pricey resorts and home rentals they had booked for the holidays.

Then in February, flights were grounded in parts of Mexico, including in the coastal resort city of Puerto Vallarta and in Guadalajara, after violence broke out following the Mexican army’s killing of a cartel leader.

Executives have already had to make costly changes: rerouting or cancelling sailings, issuing flexible booking and refund policies, grounding planes and changing flight plans altogether, or discounting hotel rooms.

The cost of these conflicts is still being tallied, including for fuel, one of the biggest expenses for cruise companies and airlines along with labor, and are usually passed along to consumers, so that means pricier tickets and stays could be in the cards.

Australian carrier Qantas, for example, told CNBC that its flight from Perth, Australia, to London will now travel a route that requires it to stop to refuel in Singapore, though that will also allow it to pick up another roughly 60 passengers. 

Travel executives started off 2026 as they often do: upbeat. Some airline executives, including those at the most profitable U.S. carriers, Delta Air Lines and United Airlines, forecast record earnings this year.

The war and other incidents erupted as the travel industry has been leaning on premium options to woo wealthier customers, who make up a greater share of spending overall. Losing the base for more expensive trips could be extra disadvantageous to those companies and local economies.

In Mexico, for example, tourism makes up close to 9% of the economy and international tourist arrivals rose 13.6% last year to 98.2 million people, who spent close to $35 billion, according to the country’s Tourism Ministry.

Now, airlines are pulling back on traveling to Puerto Vallarta, at least from the United States in the near term. Delta cut routes from April 3 through the end of the month to the city, except for once-daily flights from Los Angeles and Atlanta, according to the Cranky Network Weekly newsletter, which covers the airline industry’s network changes. Alaska Airlines and Southwest Airlines also cut service in March.

“Perhaps people will forget about the PVR [Puerto Vallarta International Airport] concerns now that headlines will shift to the Middle East and bookings will rebound, but we will be watching capacity changes as leading indicators,” Brett Snyder and Courtney Miller, the newsletter’s authors, said in the March 1 edition.

The recent issues also come three months ahead of the FIFA World Cup, which is set to be hosted by cities in Canada, Mexico and the United States.

Some hotels in Mexico are starting to notice a change, too.

Victor Razo, manager at the Rivera del Rio hotel in Puerto Vallarta, told CNBC that bookings are down around 10% compared with last year.

“We’ve had some promotions given what had happened,” he said, adding it brought down rates between 10% and 20% ahead of the busy spring break and Holy Week period in the coming month.

He added that the hotel wasn’t near the problems, which included road blockades, and that bookings have since stabilized.

“It’s not like the beginning of the pandemic,” he said. “There is no comparison.”