*Airline executives are dialing back their optimism for 2025 as domestic travel demand shows signs of softening.
Major carriers, including Delta, American, Southwest, and Alaska Airlines, are reassessing their growth strategies, citing widespread economic uncertainty and weaker-than-expected ticket sales, CNBC reports. On recent earnings calls, airline CEOs pointed to multiple factors contributing to reduced demand, from volatile markets to the unpredictable economic climate under President Donald Trump’s administration.
“Nobody really relishes uncertainty when they’re talking about what they could do on a vacation and spend hard-earned dollars,” said American Airlines CEO Robert Isom.
This uncertain outlook has led several airlines to scale back their previously ambitious capacity expansion plans. Delta, Southwest, and Alaska Airlines pulled their 2025 financial forecasts, and American Airlines followed suit. United Airlines remains optimistic and expects to remain profitable even during a recession.
Cheaper airfare is now becoming more common as carriers work to fill seats. According to the Bureau of Labor Statistics, domestic ticket prices dropped 5.3% year over year in March, following a 4% dip in February. The surplus of seats, combined with a lag in business and government travel, is pressuring airlines to cut fares. Corporate travel, once a high-margin segment, is also losing steam.
“If uncertainty pops up, the first thing that goes away is corporate travel,” explained Conor Cunningham of Melius Research.
“The fares aren’t as strong as they were in the fourth quarter of last year and coming into January and first part of February,” Shane Tackett, Chief Financial Officer for Alaska Airlines, told CNBC. “Demand is still quite high for the industry, but it’s just not at the peak that we all anticipated might continue coming out of last year.”
Despite robust international demand and stable premium cabin sales, the broader domestic market remains sluggish.
“Certainty will restore the economy, and I think it will restore it pretty quickly,” Isom added, reflecting the hope shared across the industry.
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