The panel at the DFWC webinar today, moderated by TFWA’s Nicole Daniells.

The harsh reality of the impact of the US-Israel conflict with Iran was laid bare today (Wednesday) in a webinar from the Duty Free World Council (DFWC) hosted by its President, Sarah Branquinho. Data from nine major airports in the Middle East showed a passenger shortfall of 27 million in March-April, resulting in the aviation business losing between $900m and $1bn in revenue over this period.

The implications for travel retail are stark, with an estimated retail loss of $100m across the larger hubs in the region, driven mainly by the decline in transit passengers.

The headline figures came from a May report by Airports Council International Asia-Pacific & Middle East. They were presented by Slava Cheglatonyev, Senior Director Economic Policy and Airport Business at global airports association ACI World.

Cheglatonyev noted that from a non-aeronautical perspective, the Asia-Pacific/Middle East (AP/ME) region was still -22.8% down on pre-Covid levels (based on 2024 data). While gains were likely made in 2025, the shortfall is important because retail concessions in the AP/ME region account for 38.9% of non-aeronautical revenue, well above the world average of 23.1%.

Middle East traffic down -13% in Q1

While global traffic remained resilient in Q1 2026, in the Middle East it collapsed by -13%, year-on-year. Elsewhere, the YOY growth ranged from +0.5% in North America to +8.4% in Africa. Referencing the Q1 decline in the Middle East, Cheglatonyev said: “This does not appear to be a short-term disruption.”

ACI World has had to recalculate its traffic forecasts for 2026 due to the conflict and elevated jet fuel costs. From an original count of 10.2 billion passengers (up +3.9% YOY), the revised figure is now 10 billion (up +2.7%). At the international level, that means 200 million fewer passengers this year. Already, 27 million of those were lost in March and April across just the nine Middle East hubs reviewed by ACI AP/ME.

With June-July airfares at +50% above the prior year at those airports, traffic is likely to remain subdued, even as major airlines like Emirates and Qatar Airways restore their networks and frequencies. A V-shaped recovery is therefore not envisaged.

The Asia-Pacific Middle East region relies on retail revenue far more than other regions.

Abdeslam Agzoul, President of the Middle East & Africa Duty Free Association (MEADFA), and Avolta’s Middle East & Africa CEO said drone strikes last week on Kuwait International Airport showed that “the situation continued to be extremely volatile”. He added: “The recovery – if it is sustained – is fragile to say the least.”

Travel retail supply chains hit hard

He added: “If air fares continue to rise, and air travel becomes once again available only to a privileged few, then our ability to increase sales will be impacted.” Q1 arrivals to the Middle East were down by 14% in Q1, with significant drops in hotel occupancy.

As well as being directly affected by the large reductions in passenger volumes, travel retailers in the region are also suffering from major supply chain disruptions at an operational level. This is a major pain point.

Agzoul said: “Getting product from A to B has become extremely expensive, time-consuming, and sometimes close to impossible. In the region, the industry is working tirelessly to find solutions.”

He called for “a high level of agility” and more innovative ideas for overcoming the logistics barriers caused by the conflict. Diversification using smaller and mid-size ports as well as a shift to road and rail have become much more important under the extenuating circumstances.

He also said the classic concession model based on a minimum annual guarantee was “inappropriate in a time of crisis” and that “there is a need for flexibility on all sides”. On a positive note, he added that the crisis was leading to tighter partnerships with stakeholders in many cases. The MEADFA President added: “I’m hopeful that we’ll see a recovery in the second half, but it will be gradual.” In other words, a slower ‘swoosh’ recovery, not a V-shaped rebound.

READ MORE: Middle East arrivals could decline by -27% in 2026: Tourism Economics

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