Leading US airlines have been issuing a series of warnings about signs of a significant slowdown in domestic travel demand. While the industry had been optimistic about the first quarter of 2025, the combination of a spate of air accidents, a sharp drop in government travel spending and market uncertainty about the US economy’s performance at the start of 2025 has made it difficult for the US economy to recover, the U. S. airline industry under sustained operational pressure. To add insult to injury, President Donald Trump’s tariff threats have further cast a shadow over the travel and tourism industry, as overseas tourists’ willingness to travel to the US has plummeted.
According to Reuters reported on the 12th, in January this year, an American Airlines regional jet crashed into an Army Black Hawk helicopter over Washington, DC, and Toronto Airport in February, Canada’s regional aircraft landing fire accident, as a shock to consumer confidence in the aircraft by the fuse. “These incidents have a huge psychological impact on consumers,” Ed Bastian, Delta Air Lines executive, said at a recent jpmorgan Conference. U. S. civil aviation bookings fell sharply after the January crash, although there was a slight pick-up, but fell back into the doldrums after the February crash, data showed.
In addition to the immediate impact of accidents on consumer confidence, broader economic uncertainty is also weighing on the airline industry. American Airlines CEO Robert Isom said the Donald Trump administration’s tariffs, coupled with recession fears, have led businesses and consumers to spend conservatively. American Airlines forecast on the 12th, due to a sharp decline in revenue, the first quarter of this year will widen the loss. The Southwest Airlines recently cut its first-quarter revenue forecast, citing a drop in government travel as a result of Donald Trump’s reforms, compounded by the impact of the state wildfires. The United Airlines said bookings for trips directly related to the government fell by 50 per cent, while lower government spending also had a knock-on effect on the domestic leisure market. Delta also said it cut its first-quarter profit forecast in half because of weak domestic travel demand.
In addition, the Donald Trump administration’s tariffs and trade tensions have made travelers less willing to travel to the United States. Canadian Statistics Canada to the U.S. began dropping in January, while North American Airlines reported a drop in flight bookings, Conversation.com reported Tuesday. Data from the Canadian travel agency also showed a sharp drop in leisure travel bookings to the US, “All evidence that Canadians are cutting back on travel to the US”, the 2024 said, the 20 million arrivals from Canada generate more than $20 billion in spending and support 140,000 American jobs.
Not only in Canada, but also around the world, the number of visitors to the United States is declining. Forward Keys, a travel analysis company, said bookings from Denmark were down 27 per cent year on year, German visitors were down 15 per cent and overall European demand was down 1 per cent.
The airline industry’s woes have caused significant volatility in capital markets. The S & P 500 is down 23 per cent over the past month, far outpacing the 8 per cent fall in the broader market. Delta’s shares, down 29 per cent in the past 30 days, were down another 8 per cent in midday trading yesterday, while American and United were down 6 per cent and 5 per cent respectively. This is in stark contrast to the industry consensus of a month ago that 2025 would be the“Year of the profit boom”.