US-Iran conflict: Travel insurance under pressure as over 3,000 flights cancelled

Flight cancellations due to Iran-US conflict

• Over 3,000 global flights cancelled amid US-Iran tensions
• Travel insurance often excludes war-related disruptions
• Indian airports see over 150 international flight cancellations

Did our AI summary help?

The escalating US–Iran conflict is likely triggering what seems to be one of the largest waves of international travel disruption this financial year, with more than 3,000 global flights cancelled and thousands of passengers facing uncertainty over travel insurance claims, as most standard policies exclude losses linked to war-risk events.

With airspace closures across key West Asia transit corridors, industry executives who deal with aviation insurance say airlines would work on issuing refunds, as insurance payouts for hotels, connections and last-minute cancellations may not be guaranteed.

Escalating military tensions between the United States, Israel and Iran and Iranian strikes on American and other assets in Gulf countries have forced airlines to suspend services or reroute flights away from restricted airspace.

Over the past few days, more than 1,200 flights have been cancelled daily, report have said.  Major global transit hubs such as Dubai, Doha, and Abu Dhabi are experiencing severe operational strain, as they serve as connecting points between Asia, Europe and North America.

Travel insurers and aviation analysts say this phase of disruption is particularly complex because of how policies treat geopolitical conflict.

Most international travel insurance policies provide coverage for trip delays and cancellations but contain explicit exclusions for acts of war or civil conflict, they say.

“Passengers assume insurance protects their entire trip, but war exclusions can leave large gaps in coverage,” said Hardik Rawat, an aviation risk analyst at GlobalFlight Analytics.

An executive at a global insurance underwriting firm said insurers are already tightening exposure to Middle East routes. “If this continues, war-risk premiums could become a permanent feature of international travel pricing,” the executive said on condition of anonymity.

Flight cancellations, travel uncertainty  

In India, where Gulf routes account for a large share of international traffic, the impact has been significant.

Airports in Delhi and Mumbai have reported more than 150 combined international flight cancellations in peak hours. Indian carriers such as IndiGo and Air India have issued passenger advisories offering rebooking and refund flexibility, but these do not extend to reimbursing external travel expenses such as hotel stays, tours or onward transport.

Airlines are also likely facing rising operational costs due to longer rerouting distances.

Flights that previously passed directly through Gulf air corridors are now flying around restricted zones, adding up to two-three additional flight hours a journey and significantly increasing fuel burn. Industry estimates suggest Indian airlines alone could face hundreds of crores in short-term revenue losses if the conflict continues.

“The real economic damage is not just cancellations, it is uncertainty,” said Manish Vora, an aviation economist. “Repeated geopolitical shocks are forcing airlines, insurers and travellers to reprice risk across the entire international travel ecosystem.”

Analysts also warn that frequent disruption phases this financial year could weaken consumer confidence in long-haul travel, particularly on routes dependent on West Asian Eastern transit hubs.

Passengers currently stranded in transit cities are facing rising accommodation costs and limited onward connectivity options, according to several reports. Governments across Europe and Asia have issued travel advisories urging citizens to avoid non-essential travel to high-risk zones until airspace stability improves.

Aviation experts warn that unless diplomatic tensions ease, the global aviation industry could continue experiencing volatility in pricing, insurance costs and network planning throughout the year.