Overseas travel demand slows as high fares and weak rupee hit bookings

India’s outbound travel market is beginning to lose momentum as rising international airfares, a weakening rupee and continuing geopolitical uncertainty dampen consumer sentiment ahead of the peak summer season.

While airlines have not reported large scale cancellations, industry executives say forward bookings for overseas travel have weakened noticeably in recent weeks as operating costs surge and travellers reassess discretionary spending.

The slowdown comes after Prime Minister Narendra Modi urged citizens to postpone foreign travel for a year and prioritise domestic tourism as part of broader economic austerity measures linked to the ongoing West Asia crisis, according to reporting by The Economic Times.

Airlines see weaker booking trends

Airline executives said passengers who had booked international holidays before the recent escalation in fuel prices and geopolitical tensions are still travelling, but fresh bookings are slowing.

“There are no reports of any large-scale cancellations, but sentiments are very down due to the prevailing conditions,” an airline official told The Economic Times. The executive added that forward bookings are showing a weak pattern as travellers react to higher costs and uncertainty.

Another airline executive told the publication that several international routes are no longer financially viable under current conditions.

“We are not even recovering the operating cost in many international flights,” the official said, adding that raising fares beyond a certain level risks damaging demand further.

The remarks underline the growing pressure on airlines operating long haul international services, especially as rerouted flight paths and elevated aviation turbine fuel prices continue to inflate operating expenses.

International airfares rise sharply

Industry bodies and travel companies cited a combination of higher jet fuel prices, restricted airspace and currency weakness as the main factors affecting outbound demand.

The weakening rupee has further increased the cost of overseas travel for Indian consumers, making international holidays, hotel stays and foreign currency spending significantly more expensive.

Several carriers have already started adjusting international schedules in response to these pressures.

Air India, for example, recently announced reductions across multiple routes connecting India with Europe, North America and Asia as part of a broader effort to stabilise operations and manage costs.

The airline has cited:

• High aviation fuel prices
• Longer international flight paths
• Restricted airspace access
• Volatile geopolitical conditions

as major reasons behind its revised schedule planning.

Domestic tourism expected to benefit

While outbound travel demand is slowing, travel companies believe domestic tourism could emerge as a key beneficiary.

Govind Gaur, founder and chief executive of travel platform WanderOn, told The Economic Times that the industry is witnessing a shift rather than a collapse in demand.

“For the travel industry, this moment is not necessarily about a decline in overall travel demand, but rather a redistribution of demand from outbound tourism to domestic exploration,” Gaur said.

According to him, interest is growing across:

• Premium domestic holidays
• Adventure tourism
• Road trips
• Group travel experiences
• Destination celebrations within India

Industry leaders say domestic tourism has become one of the strongest growth drivers for India’s hospitality sector, particularly across Tier 2 and Tier 3 destinations.

KB Kachru, president of the Hotel Association of India and chairman for South Asia at Radisson Hotel Group, said domestic tourism is supporting employment generation, infrastructure utilisation and hospitality growth across the country.

“In the current volatile geopolitical environment, stronger domestic tourism also contributes towards conserving foreign exchange while building a more resilient and self-reliant travel ecosystem,” Kachru told the publication.

Tourism sector seeks balanced strategy

Travel and hospitality bodies have also urged policymakers to balance efforts aimed at reducing outbound spending with measures designed to attract more inbound tourists to India.

Rajiv Mehra, general secretary of the Federation of Associations in Indian Tourism and Hospitality (FAITH), said India must simultaneously strengthen international tourism promotion and improve connectivity.

According to Mehra, easing visa restrictions and improving overseas marketing efforts would help India capture greater inbound tourism demand.

He noted that despite India’s cultural and natural tourism appeal, the country continues to attract relatively modest international visitor numbers compared with other major tourism economies.

Tourism ministry data cited by The Economic Times shows outbound travel from India has risen by more than 14 per cent since the pandemic, while inbound foreign tourist arrivals have still not fully returned to pre-pandemic levels.

Airlines prepare for a cautious summer

The current slowdown in international bookings reflects a broader recalibration underway across the aviation sector as carriers prioritise profitability and operational resilience over rapid expansion.

Many airlines are now managing capacity more conservatively, especially on long haul international routes where fuel exposure remains high.

For passengers, the immediate impact is likely to include:

• Higher international ticket prices
• Fewer flight options on some routes
• Reduced frequencies across overseas markets
• Greater emphasis on domestic holiday packages

Whether outbound demand rebounds later this year will largely depend on fuel price stability, geopolitical developments and currency movements over the coming months.

For now, airlines and travel companies appear to be preparing for a slower, more cautious international travel market while domestic tourism gains fresh momentum.