Here's the thing about geopolitical conflicts—they don't just stay on the news ticker. They ripple through economies in ways that can feel unfair. The ongoing Iran-Middle East war has thrown India's travel sector into turbulence, but not everyone is feeling the same intensity of the storm. Jefferies, the global brokerage firm, recently cut target prices across its travel coverage, and the pecking order is clear: Airports > Airlines > Hotels. Let's break down why.
InterGlobe Aviation, which operates IndiGo, finds itself in the eye of the storm. The airline has substantial exposure to Middle East routes—about 35-40% of its international capacity is linked to the region. When airspace closes and routes get suspended, IndiGo can't just reroute easily. It's facing operational disruptions on a massive scale, with routes to Doha, Kuwait, Bahrain, and others remaining suspended. This has forced IndiGo to slash its capacity growth guidance from 10% year-on-year to roughly 4% for the fourth quarter of FY26.
But the operational headaches are just the beginning. The real pain is financial. Aviation Turbine Fuel (ATF) prices have surged over 130% month-on-month in April 2026, and fuel makes up 35-40% of IndiGo's operating costs. To make matters worse, the rupee has depreciated to around Rs 93.5-94.0 per USD, creating massive forex losses—IndiGo reported mark-to-market losses of about Rs 2,892 crore in Q2 FY26 and another Rs 1,113.4 crore in Q3 FY26. That's over Rs 4,000 crore in forex losses in just two quarters.
Jefferies has cut IndiGo's target price from Rs 6,140 to Rs 5,500, a 10.4% reduction. The math is brutal: higher costs, limited ability to raise fares without suppressing demand, and capacity constraints all compressing profitability margins.
Hotels are feeling the pinch too, but in a different way. Foreign Tourist Arrivals (FTAs) to India declined by 2.4% in 2025 compared to 2024, and hospitality chains are reporting a 10-12% drop in overseas bookings. This matters because international guests typically pay 20-30% premium rates over domestic travelers and stay longer—4-5 nights versus 2-3 nights for domestic guests. When they cancel or postpone, it hits both occupancy and average room rates.
Jefferies has de-rated hotel stocks with target price cuts: Indian Hotels Company from Rs 900 to Rs 800 (-11.1%), ITC Hotels from Rs 250 to Rs 210 (-16%), and Chalet Hotels from Rs 1,075 to Rs 910 (-15.3%). The brokerage expects RevPAR growth to decelerate sharply from 12-13% in Q3 FY26 to just 5-7% in Q4.
However, hotels have a cushion that airlines don't: domestic tourism. Nearly 65% of Indian travelers now prefer domestic trips over foreign travel, and destinations like Udaipur have seen 69% year-on-year growth in domestic bookings. Corporate travel remains resilient too, particularly in tech hubs like Bengaluru and Hyderabad. This domestic substitution helps support occupancy even as international weakness persists, though at lower average rates.
GMR Airports is the standout story here. Despite international traffic headwinds, Jefferies has maintained its BUY rating and Rs 125 target price with zero reduction. Why? Because airports have structural advantages that airlines and hotels simply don't.
First, GMR benefits from regulated revenue. The Airport Economic Regulatory Authority (AERA) has issued tariff orders for the Fourth Control Period (CP4), effective April 16, 2025, which approximately triples aero tariffs at Delhi Airport through FY29. AnnualReports +1 That's five years of revenue visibility regardless of what happens with passenger volumes.
Second, GMR has diversified beyond just being a utility for flights. Non-aeronautical revenue—retail, duty-free, cargo, parking—now accounts for about 60% of total revenue. Delhi Duty Free operations commenced in July 2025, and the company is targeting 15% year-on-year growth in non-aero revenue streams. This retail consumption model is far less sensitive to specific route disruptions than airline operations.
Third, GMR has multiple growth engines working simultaneously. Passenger capacity is expanding dramatically—Delhi from 66 million to 100 million, Hyderabad from 12 million to 34 million—and the greenfield Bhogapuram airport in Andhra Pradesh is progressing ahead of schedule for a mid-2026 launch.
The Iran-Middle East conflict has created significant macroeconomic pressures. Brent crude prices have spiked amid fears of supply disruption through the Strait of Hormuz, and India imports over 80% of its crude oil, with 40%+ transiting through this critical chokepoint. The Nifty 50 fell more than 10% in March 2026—its worst monthly sell-off on record—as foreign investors sold over $12 billion.
But within this turbulence, the travel sector's differential impact tells an important story about business models. Airlines face direct operational disruption and cost structure sensitivity—they're volume-dependent with high operating leverage. Hotels face demand-side vulnerability but benefit from domestic substitution. Airports, with regulated tariffs, non-aero diversification, and asset-heavy infrastructure, have the most resilient model.
Jefferies' pecking order isn't just about who gets hurt less in the short term. It's about structural fundamentals that determine how each sub-sector weathers geopolitical storms. For investors watching this space, the lesson is clear: not all travel exposure is created equal, and business model resilience matters as much as growth prospects.
