But what might this mean for Qatar’s economy and people doing business there?
With a population of about two million people, this tiny nation on the north-east coast of the Arabian Peninsula is trying to punch above its weight.
People know about it thanks in part to its national airline (Qatar Airways), its international news station (Al Jazeera) and through sport (notably winning the 2022 football World Cup and being a former sponsor of perhaps the world’s most famous club, Barcelona).
And with a distinctive skyline in the capital Doha, it has succeeded in attracting multinationals to open offices there.
So these latest developments mean there’s a lot at stake.
Abu Dhabi’s Etihad Airways and Dubai’s Emirates said they would suspend all flights to and from Doha, starting from Tuesday morning. Both carriers operate four daily return flights to Doha.
Budget carrier FlyDubai is also cancelling the route, with other airlines, including Bahrain’s Gulf Air and Egyptair expected to follow suit.
But being banned from large chunks of airspace in the region would also cause a major problem, forcing it to alter flight paths, inevitably adding time to flights.
And as well as cranking up fuel bills, that could annoy passengers.
Qatar Airways’ growth has come through positioning itself as a hub airline, connecting Asia and Europe via Doha.
“If a journey to Europe that used to take six hours now takes eight or nine because it has had to change routes, then that makes it far less appealing and passengers might look elsewhere,” says Ghanem Nuseibeh, director at advisory firm Cornerstone Global.
Desert states, by their nature, struggle to grow food. And food security is a particular issue for Qatar given the only way in by land is a single border with Saudi Arabia.
Every day hundreds of lorries cross the border, and food is one of the main supplies. About 40% of Qatar’s food is believed to come via this route.
“It will immediately cause inflation and that will directly affect normal Qatari people,” says Mr Nuseibeh.
“If things start costing significantly more, then you’re going to see the Qatari people putting increasing political pressure on the ruling family for either a change of leadership or a change of direction.”
He also points out that many poorer Qataris make daily or weekly trips to Saudi to do their grocery shopping as it is cheaper. Clearly a closed border means this will no longer be possible.
A new port, a medical zone, a metro project and eight stadiums for the 2022 World Cup are just some of the major construction projects going on in Qatar right now.
Key materials, including concrete and steel come in by ship but also by land from neighbouring Saudi.
The closure of that border could, as with food – push up prices and lead to delays.
A materials shortage is already a threat that looms over Qatar’s construction industry. This risks making things worse.
A lengthy closure of the airspace and land borders would “wreak havoc on the timeline and delivery” of the World Cup, says Kristian Ulrichsen, a Gulf expert at the US-based Baker Institute.
More significant though would be if Egypt issued a similar ban. According to one recent report about 180,000 Egyptians live in Qatar – with many involved in engineering, medicine and law as well as construction.
A loss of that workforce would pose a problem for both local and international firms operating in the Gulf state.