Decline in US air traffic: a bad sign for the Stars and Stripes economy
Three major U.S. airlines have warned of slowing domestic demand, prompting them to lower their first-quarter revenue and profit forecasts.
American Airlines scaled back its outlook, citing “weakness” in demand for domestic leisure travel and the impact of a plane crash in late January.
United Airlines ' CEO also expressed concern about weak domestic demand, predicting "tougher economic times ahead."
United Airlines plane
These comments follow an earnings warning issued by Delta Air Lines , which pointed to declining consumer and business confidence due to economic "uncertainty." These negative revisions are among the clearest signs of an erosion in consumer and business confidence amid an uncertain global economic landscape.
A decline in demand for air travel is a sign of a potential broader decline in consumer confidence in the United States.
American Airlines specified that “the revenue environment was weaker than expected due to the impact of Flight 5342 (the Washington air crash ) and weakness in the domestic leisure travel segment, especially in March.” The company now expects “flat” revenue growth from a year earlier and an adjusted loss of 60 to 80 cents per share this quarter. Just two months ago, it forecast revenue growth of 3-5% and an adjusted loss of 20-40 cents per share.
Scott Kirby, United's chief executive, said the weakness in domestic demand "started with the government" . Public sector clients represent approximately 2% of the company's business, while consultants, contractors and government-related sectors make up a further 2-3%. Spending by these customers is “currently down about 50%, so quite a significant impact in the short term,” he added. “And we've seen some of that trickle down into the domestic leisure travel market.”
Kirby also noted a “sharp decline in Canadian traffic to the United States.” Relations between the two countries have been tense since former President Trump announced tariffs on Canadian imports, prompting retaliation from Ottawa.
Delta Airlines plane
Delta said it expects all carriers in the industry to be "experiencing some form" of the weakness seen in the industry. “Given the amount of macroeconomic uncertainty that exists, I think people are being overly cautious and pulling back on travel a little bit,” Delta CEO Ed Bastian said, adding that customers are “waiting to see what happens” on issues such as trade, tariffs and macroeconomic policy changes. Another factor that affects demand is "the national consumer, who is more sensitive to price".
The decline in air traffic is therefore linked to a decline in consumer and business confidence due to general economic uncertainties , in particular those linked to trade and macroeconomic policies. This translates into a reduction in spending on leisure travel and, more generally, a decline in consumption , a negative signal for the US economy.
The airline sector, therefore, acts as a leading indicator of a possible broader economic slowdown , with repercussions also on other leisure-related sectors, such as cruise companies, which are also down on the stock market. Moreover, we have even mentioned the fact that an economic slowdown in this phase could very well be part of Trump's strategies.
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The article Decline in US air traffic: a bad sign for the Stars and Stripes economy comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/calo-del-traffico-aereo-usa-un-pessimo-segnale-per-leconomia-a-stelle-e-strisce/ on Thu, 13 Mar 2025 08:00:38 +0000.