Indian carriers face severe operational and financial strain as Middle East airspace closures force widespread cancellations. More than 350 flights canceled Sunday marked a third consecutive day of disruptions. Air India rerouted US flights through Rome while IndiGo suspended services to European destinations through March 2, with both carriers already unable to use Pakistani airspace.

The regional conflict disproportionately affects Indian airlines due to their heavy exposure to Middle Eastern routes. SpiceJet's entire international schedule faces 100% exposure, while Air India Express and IndiGo report 60% and 41% exposure respectively. Rerouting adds over 2.5 hours to flight times, creating deeper operational pressure than on European or North American carriers.

Market reactions reflected the immediate impact, with SpiceJet shares falling as much as 9.2% and IndiGo slumping nearly 8%. The disruption eliminates a critical currency hedge against rupee depreciation amid rising crude prices.