Airlines have come a long way since the dark days of the COVID-19 pandemic. Many carriers have seen travelers come roaring back, with passenger counts last year surpassing 2019 levels, according to Airports Council International (ACI). But despite the upswing in recent years, it appears as though the runway on the industry’s rosy outlook is about to run out. In fact, the latest forecasts from Delta and other major airlines show they’ll likely be struggling to hit their projected numbers for the rest of the year.
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The forecast is looking bleak for airlines in 2025.
The short-term economic outlook has shifted in light of President Donald Trump's sweeping tariffs that could spike the price of everything from groceries to cars—and even auto insurance. Now, experts say air travel will also be affected as the once-lofty predictions for a stellar year appear to be hitting the same turbulence as other industries.
"I went into this year expecting it to be a blue sky year for airlines," Tom Fitzgerald, analyst with investment bank TD Cowen, told The Wall Street Journal. "Now it’s just kind of clouds everywhere, and it’s unclear when they’re going to dissipate."
The major American carriers were not spared during the latest rout to rock the stock market that followed the tariff announcements. As a result, Delta, United, and American saw the price of their shares tumble more than 38 percent, 40 percent, and 45 percent, respectively, since the beginning of the year, CNBC reported on April 7.
But while a lukewarm market recovery may have helped the companies in the short term, they still face other issues, including a 50 percent drop in government travel bookings amid budget cuts and a sharp drop in corporate flight booking.
Delta just scaled back its financial projections.
The change in momentum is already becoming apparent to airlines like Delta. In March, the carrier announced it had cut back its first-quarter revenue growth projection from six to eight percent growth down to no more than five percent, CNBC reported.
The situation appeared even more grim last week when the airline said it was canceling plans to bulk up its flight schedule for the second half of 2025 after previously predicting it would see its most profitable year in the company’s history.
"With broad economic uncertainty around global trade, growth has largely stalled," Ed Bastian, CEO of Delta Air Lines, said during an earnings call on April 9. "In this slower-growth environment, we are protecting margins and cash flow by focusing on what we can control."
Bastian specifically cited the prospective tariffs as a likely reason for the sharp dip in consumer confidence, adding that the controversial trade tactics were creating "a chaotic period" for the aviation industry, per The Wall Street Journal.
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Other carriers will likely feel the pinch.
It’s not just Delta that’s weathering the adverse conditions: Other major carriers are also signaling that there might be industry-wide trouble ahead.
Last month, Southwest Airlines announced it had scaled back its first-quarter projections from five to seven percent to two to four percent, citing uncertainty caused by tariffs, Reuters reported. Meanwhile, American Airlines also said it expected a much greater loss in the first quarter amid waning travel demand.
While softer pricing might seem like a workaround during tough times, even some low-cost airlines are feeling uncertain. Last week, budget airline Frontier joined Delta in scrapping its full-year financial forecast as the outlook sours, Reuters reported.
Overall, analysts at TD Cowen agree that the adverse economic conditions will "disrupt" the airline industry in the coming months.
"We are concerned that the new economic paradigm causes another structural leg down in corporate travel while the negative wealth effect further dampens consumption, especially by Baby Boomers," analysts from the investment bank wrote in a brief on April 4, per CNBC.
Here’s what this could mean for your travel plans.
There’s already evidence that the proposed isolationist economic policies are impacting the airline industry. This includes a 70 percent drop in booked flights from Canada to the U.S. and travel advisories from European governments about revised entry policies at the American border.
However, this softening demand could result in premium airlines competing with budget airlines for passengers with even lower airfare, Conor Cunningham, an analyst with Melius Research, told The Wall Street Journal. But even amid bargain prices, some might still be too uncertain to pull the trigger.
"I’ve been sitting on my hands and not planning as much for summer or the latter part of the year because I don’t know what’s going to happen," Jed Meyer, a prospective traveler, told The Wall Street Journal.
