As summer approaches, rising prices and disruptions from the conflict with Iran are challenging tourism-dependent economies in Southeast Asia, including Thailand and Vietnam. The peak summer travel season is in jeopardy due to increased jet fuel costs and uncertainties surrounding ceasefires. This has led to flight cancellations and higher ticket prices.
Tourism in Asia has not fully rebounded from the COVID-19 pandemic. Now, countries must also handle the war’s impact on global energy supplies and prices. The effects hit Asia first and hardest. With gas stations and grocery stores becoming more expensive worldwide, many families are cutting back on travel plans. Tourist numbers are decreasing in popular destinations.
“With gasoline prices rising and tourism declining, how can we make money?”
This question from Siv Pech, a 58-year-old tuk-tuk driver in Siem Reap, Cambodia, underscores the issue. Tourism is crucial for many developing economies. It contributes about 13% of Thailand’s GDP and almost 9% of Vietnam’s. It supports millions of jobs in Cambodia and provides vital foreign currency for import-reliant economies like the Philippines and Nepal.
The war-induced spikes in oil prices are escalating fuel import costs, especially for parts of the world that depend on oil and gas flowing through the Strait of Hormuz off Iran. According to Jitsai Santaputra from The Lantau Group, an energy industry consulting firm, the war will determine which tourism businesses survive until travelers return. The pandemic hit first, now the conflict—this sequence is damaging for the tourism industry.
Airline Challenges
Jet fuel shortages and rising costs have forced Vietnam Airlines, Malaysia-based AirAsia, Hong Kong’s Cathay Pacific, and others to adjust schedules or reduce flights. European airlines face similar challenges. Airspace restrictions in the Persian Gulf and intermittent closures of Gulf airports have severed key layover routes for Asia-bound flights or made them longer and more expensive. Airlines such as Air India and Cathay Pacific have responded by sharply increasing fuel surcharges.
Cathay Pacific’s surcharge for medium-haul flights has gone up to 633 Hong Kong dollars ($80), previously 264 Hong Kong dollars ($34). Long-haul flights saw increases to 1,362 Hong Kong dollars ($174) from 569 Hong Kong dollars ($73). Lavinia Lau, Cathay’s chief customer and commercial officer, noted the high jet fuel prices and their cost impact. Travelers are booking closer to departure, reflecting their discomfort.
Sandra Awodele, a travel writer from Washington planning her first trip to Asia, faced a roadblock due to surging airfares. Her dream of exploring Thailand for a couple of weeks had to be reconsidered.
Economic Strain on Local Workers
In Southeast Asia, rising fuel prices impact taxi and ride-hailing app drivers. Siv Pech, the tuk-tuk driver, saw his earnings drop significantly from up to $20 a day to about $5. Most of his earnings go toward fuel and food, leaving him with little to save.
Tourism accounts for nearly 11% of economic activity in the Association of Southeast Asian Nations (ASEAN) based on 2019 data from the World Travel and Tourism Council. Moody’s Analytics advises that the war could decrease economic growth in the Asia-Pacific region by 0.1 to 0.4 percentage points in 2026.
Albert Park, chief economist at the Asia Development Bank, stated that the conflict affects growth through higher production costs and consumer prices, along with lowered demand from trade and tourism. According to a United Nations Development Program report, higher airfares and falling travel confidence could impact economies where tourism is essential.
Tourism Industry Adaptation
Le Tuyet Lan, an operator of bed-and-breakfast properties in Vietnam, mentioned that during economic crises, luxury travelers move to midrange options, while others opt for budget accommodations. Unfortunately, the budget sector is most vulnerable.
In Thailand, a leading tourist destination, visitor numbers fell by 7% in April compared to the previous year, with a 16% drop from Europe and a 57% decrease from the Middle East, as reported by Thailand’s Ministry of Tourism and Sports.
In Cambodia, Sokha Sambo, who owns a restaurant in Siem Reap, explained how increased costs of liquefied petroleum gas have affected her business. She struggles to maintain profitability and pay her 14 staff members’ salaries due to gas price escalation. Visitor numbers in Siem Reap declined by 37.5% in the first four months of 2026 compared to the prior year, according to the tourism department.
With the tourism industry across the region suffering under these pressures, concerns remain regarding the ability to recover. Lower tourist arrivals create a domino effect, reducing incomes, jobs, and public revenues.