Topline
Within the past 24 hours, four major U.S. carriers—Delta, American, Southwest and JetBlue—have dimmed their outlooks for early 2025, acknowledging softer demand for domestic air travel and lower consumer confidence amid suddenly shaky economic conditions.
Major U.S. airlines are seeing lower demand for domestic air travel as well as government travel, … More
Key Facts
In a regulatory filing after the market closed Monday, Delta Air Lines cut its first-quarter projections by 40 to 50 cents a share, noting a “recent reduction in consumer and corporate confidence caused by increased macro uncertainty, driving softness in domestic demand.”
American Airlines said in an SEC filing on Tuesday that it expects to lose between 60 and 80 cents a share in Q1 2025, a significantly bigger loss than the 20 to 40 cents a share it had previously forecast, noting “the impact of Flight 5342 and softness in the domestic leisure segment, primarily in March,” referring to the Jan. 29 midair collision of a regional passenger jet and a U.S. Army helicopter at Reagan National airport in Washington D.C.
Southwest Airlines cut its guidance on Revenue Per Seat Mile (RASM), a key industry metric, by 3% in an SEC filing Tuesday.
JetBlue Airways also adjusted its forecast downward in an SEC filing Tuesday, now predicting a minimum loss of 4% instead of 2% for the quarter.
The Dow Jones U.S. Airline Index was down roughly 6% before markets opened Tuesday.
Economists say the risk of a recession is rising due in part to President Donald Trump’s adversarial use of tariffs against traditional allies Canada and Mexico, but Trump has promised that any brief economic pain is worth the long-term gain.
Key Background
A drop in demand for domestic air travel can be sign of a weakening economy. “We know that GDP is one of the most important factors that our industry is correlated to,” Delta CEO Ed Bastian told CNBC on Monday. Bastian said he saw in February a “pretty significant shift in GDP sentiment” and in the “confidence signals that we monitor,” adding that “consumer spending started to stall.”
Have Doge Cuts Impacted Travel Demand?
In its SEC filing, Southwest cited “less government travel” as one reason for its less-rosy outlook, and United Airlines has also seen a drop in government employee travel post-Trump inauguration, Business Insider reported last month, noting that government travel made up roughly 2% of the carrier’s business. United took in almost $52 billion in passenger revenue in 2024, so a 2% decline in government passengers would translate to a drop of more than $1 billion in revenue.
Big Number
5.7%. That’s how much demand for domestic air travel rose in 2024, outstripping the 2.5% rise in capacity, according to full-year global passenger market performance data from the International Air Transport Association (IATA). Globally, the industry saw record-high demand for air travel, with traffic volume rising 13.6% year over year and capacity increasing by 12.8%.
What To Watch For
Historically, lower demand for air travel typically brings more affordable airfares, special offers and promotions.
Further Reading
No, Runway Near-Misses Are Not On The Rise (Forbes)
