Outbound travel bookings for the crucial April–June vacation window are down 15–20% year-on-year, according to Anand Rathi Investment Banking. A collapsing rupee nearing Rs 96 to the dollar, airfares that are up as much as 35%, West Asia’s airspace disruptions, and crude prices back above $100 a barrel have together resulted in a significantly costlier proposition for Indian families.
Through the 2013 taper tantrum, through the 2018 breach of Rs 70, through the Rs 80 crossing in 2022, outbound numbers kept climbing.
“Historically, international travel operated as an inelastic lifestyle priority for middle and upper-middle-class Indians, who absorbed exchange shocks by shortening trip durations or cutting retail spending,” Atul Thakkar, Executive Director at Anand Rathi Investment Banking, told financialexpress.com.
“However, in 2026, currency weakness has compounded with a geopolitical crisis in West Asia and oil prices pushing crude above $100 per barrel, creating a combined cost structure that has finally forced absolute volume declines.”
The numbers are unambiguous. The dollar has strengthened against the rupee by nearly Rs 10 over the past year, from a baseline of Rs 84 to between Rs 94 and Rs 96 by May 2026. Layered onto that is a 20–25% escalation in international summer tour packages.
Ten years of growth, one year of decline
According to Thakkar, India’s outbound departure numbers grew virtually without interruption from 2.04 crore in 2015 to 3.27 crore in 2025, even as the rupee depreciated steadily from Rs 64.15 to Rs 87.15 against the dollar over the same period.
The post-pandemic rebound supercharged this: after departures collapsed to 0.73 crore in 2020 and barely recovered to 0.85 crore in 2021, the market exploded 151.7% in 2022 and then surged a further 29.9% in 2023, reaching 2.78 crore. The growth then began normalising, 10.8% in 2024, adding 30 lakh travellers despite the dollar strengthening by 1.03% that year, and 6.2% in 2025, adding 19 lakh travellers even as the rupee depreciated a sharper 4.43%.
India Outbound Travel: Departures & USD/INR Rate (2015–2025)
“Currency weakness alters travel behaviour rather than causing outright cancellations, until it crosses a breaking threshold,” Thakkar explains. The data across 2023–25 illustrated exactly this: even as the exchange rate moved from Rs 82.60 to Rs 87.15, Indians kept travelling, they just adapted. It was only in 2026 that the combined weight of forces finally hit that threshold.
What a Holiday actually costs now
The rupee’s slide has a very concrete rupee-and-paise translation for the average Indian family planning a summer break abroad.
According to Thakkar, a mid-range, 8-day international vacation for a family of four, the kind that typically costs between Rs 5 lakh and Rs 6 lakh, now carries an immediate 20–25% premium. That is an additional Rs 1 lakh to Rs 1.5 lakh per package, before the family has checked in anywhere.
“Approximately 60% of an international vacation budget — meals, internal transport, entry fees — is settled in foreign currency on-site,” Thakkar pointed out. “The shift of the exchange rate toward Rs 94–96 per USD adds an immediate Rs 35,000 to Rs 50,000 out-of-pocket premium on-ground.” For a family that budgeted carefully six months ago, that is money they simply did not plan for.
How behaviour has shifted
The response to this pressure has not been cancellations across the board, at least not yet for everyone. A large portion of the market has adapted, restructuring trips rather than abandoning them.
Thakkar outlined the pattern: travellers are shortening trip durations to trim on-ground costs, downgrading hotels, or reducing shopping budgets to keep core itineraries alive. Many are switching to budget, all-inclusive packages that lock in costs upfront, trading the flexibility of unbundled travel for financial predictability.
The bigger shift, according to Thakkar, is the change in destinations. Western Europe, historically India’s aspirational long-haul market, is losing ground fast. “Consumers are pivoting rapidly away from long-haul Western Europe to budget-friendly, highly connected regional corridors like Vietnam, Sri Lanka, Malaysia, and Japan,” Thakkar noted. These markets offer shorter flights, more competitive ground costs, and visa processes that are meaningfully less complicated than the Schengen route.
Another issue that Thakkar pointed out is the Schengen Visa Bottlenecks. Despite newly relaxed multi-year guidelines for Indian citizens, visa appointment wait times for major European points of entry (France, Germany, Italy) during the peak summer booking windows still stretch between 4 and 8 weeks, forcing last-minute cancellations or shifts to Asian alternatives.
The Gulf corridor and the Schengen wall
Two structural pressure points are amplifying the currency problem in ways that have little to do with the exchange rate alone. The Gulf corridor, historically one of the single largest absorbers of Indian outbound travel, accounting for around 35% of all trips, has effectively collapsed. War conditions and airspace closures in West Asia have made that market “almost negligible” this season, according to Thakkar.
The same conflict has driven up global oil prices, which feed directly into fuel surcharges and insurance costs for airlines. The result: international airfares are running 20–35% higher than they were a year ago.
Europe, the other aspirational market, has its own friction. Despite liberalised multi-year Schengen visa guidelines for Indian citizens, appointment wait times for France, Germany, and Italy still stretch 4–8 weeks during peak booking windows. That is long enough to force last-minute cancellations or destination switches for travellers who cannot plan six months in advance.
Major domestic carriers have already read the signal. Air India is scaling back frequencies on secondary European routes, Amritsar–Birmingham, Amritsar–London Gatwick, and Goa–London Gatwick, among them, and redeploying that capacity toward Asian hubs in Singapore and Vietnam.
The 2026 contraction is different
Data compiled by the Federation of Associations in Indian Tourism and Hospitality (FAITH) puts the scale of the correction in sharp relief: outbound bookings for the April–June peak window are down 15–20% compared to the same period last year.
What makes this year stand apart from every previous rupee shock is that the currency is not acting alone. In 2013, a rupee that dropped from Rs 54 to nearly Rs 68 in months barely dented outbound growth, which continued at roughly 10% across 2013–14. In 2018 and 2022, similar depreciations produced the same result: more Indians flew abroad, not fewer.
“Currency weakness alters travel behaviour rather than causing outright cancellations — until it crosses a breaking threshold,” Thakkar explained. India crossed that threshold in 2026. The confluence of a weak rupee, a geopolitical shock in the Gulf, Rs 100-plus crude, and a government advisory urging citizens to reconsider non-essential foreign travel has done what no single factor managed before: it has turned India’s outbound travel curve downward in absolute terms.