Economists forecast a massive number of trips to Australia will be at risk this year amid the Iran war, which would be bad news for the $39 billion industry.

It’s not just Australian travellers’ plans being put at risk by the Middle East war, but international tourists travel Down Under.

More than one million visits to Australia are at risk this year amid war in the Middle East, according to forecasts from Oxford Economics’ company Tourism Economics.

While a small number of outbound travel from the Middle East contributes to that number, the overwhelming majority of trips at risk are those from nations who would travel to Australia via Middle East transit hubs like Dubai, Abu Dhabi and Doha.

“The vast majority of these are visitors travelling from European source markets – a very small portion is from source markets in Asia Pacific and North America but these are negligible,” Tourism Economics’ director of global forecasting Helen McDermott told news.com.au.

Inbound tourism contributes significantly to Australia’s economy. International visitors spent $39.2 billion in Australia in 2025 across 8.3 million trips.

Visitors from the UK alone spent $2.87 billion.

Tourism and Transport Forum Australia CEO Margy Osmond said there had of course already been noticeable impacts when airspace in the Middle East closed unexpectedly, but she believed it was too early to tell how significant the longer term impacts would be.

“Certainly there will be some kind of impact. How big that is and what it looks like is a bit difficult to put firm figures around,”

 “for example, it is likely there may be an increase in travellers using Asian-based airlines like Japanese and Chinese airlines that don’t fly via the Middle East. These airlines may increase their flights and seating capacity into Australia.

“What you might see is a shift in consumer human behaviour, as opposed to people stopping travelling,” she said, pointing to the fact Australians seem to still be travelling for Easter amid high fuel prices, but some are just choosing shorter trips that are closer to home.

However, Ms Osmond noted that while domestic travel in Australia is likely to increase, it would not compensate for a loss of international visitation as overseas visitors spend “infinitely more” than domestic tourists.

“The other thing from an Australian point of view is we’re normally a destination that people plan to come to, so they plan well in advance,” she said.

“I think the bigger impacts we’re likely to see maybe in the second half of the year as opposed to right now – beyond the obvious things that relate to Middle Eastern carriers.”

Then added:

“But there’s no doubt that governments at both state and federal level will have to be thinking about increasing their investment in marketing.

“The destination agencies are going to need an extra lick of cash to compensate and to encourage people to be coming back to Australia.”

Both traditional and non-traditional source markets would need to be targeted, she said.

Tourism Australia, the government agency responsible for promoting the country, conducted a survey of Aussie industry and travel partners overseas and found while there has been some cancellations due to flight disruptions, there is still currently strong interest in travelling here.

The agency has increased marketing in Southeast Asia and China, and is encouraging more businesses in China, Southeast Asia and Northern America to consider hosting their events in Australia.

“We are closely monitoring the situation as it is unfolding and engaging with our network of people and partners internationally, along with the industry here, to understand any impacts in tourism to Australia,” Tourism Australia managing director Robin Mack told news.com.au.

“We continue to support the industry through our marketing activities around the world to build demand for Australia’s tourism experiences, and to remind tourists that Australia is friendly, welcoming, and most of all open for business.”

Global travel effects of the Iran war

With ongoing air travel disruption and economic impacts, Tourism Economics expects 28 million outbound trips from the Middle East to global destinations are at risk this year, mostly affecting Europe – particularly Turkey, France and the UK – but Africa and Asia-Pacific destinations are also vulnerable. There were three million trips from the Middle East to the Asia-Pacific last year.

The report noted Middle East visitors tend to be higher spenders, “meaning a loss in visits will deliver a disproportionately larger economic impact”.

A further 28 million annual visitors that usually transit through the region are at risk (43 per cent of those to Asia-Pacific), plus from these same countries an additional 60 million visits are at risk – not from passing through the Middle East but from other factors like higher travel costs as capacity is tightened.

“Reduced flight capacity, rerouting and airspace constraints are already impacting long-haul connectivity between Europe, Asia-Pacific and Africa, resulting in increased journey times and airfares on flights between these regions,” Ms McDermott and senior economist Jessie Smith said.

As jet fuel supply risks grow, especially if there is continued Iranian disruption in the Strait of Hormuz, their report warned there will be further route reductions and capacity adjustments, and increased operational costs will lead to higher airfares.

“Low-cost carriers tend to see more impact, as jet fuel costs are a higher share of total costs,” the report noted.