It was supposed to be a good year.
Back in December, the International Air Transport Association said that it expected the number of airline passengers to reach 5.2 billion in 2025, up 6.7% increase from 2024.
It would be the first time that passenger numbers exceeded five billion, the industry trade group said.
“This growth means that aviation connectivity will be creating and supporting jobs across the global economy,” Willie Walsh, IATA’s director-general, said in a statement. “The most obvious are the hospitality and retail sectors, which will gear up to meet the needs of a growing number of customers.
“But almost every business benefits from the connectivity that air transport provides, making it easier to meet customers, receive supplies or transport products.”
Airlines would be contending with ongoing cost and supply-chain challenges, along with infrastructure deficiencies, “onerous regulation” and a rising tax burden, the group said.
Total industry revenue was expected to total $1.007 trillion, up 4.4% from 2024 and the first time that figure would top $1 trillion.
Delta Airlines CEO says consumer confidence has waned.
American Airlines: revenue environment weaker
So much has changed since December, as the industry has been rocked by fatal crashes, most notably the midair collision of an American Airlines (AAL) plane and an Army helicopter near Washington in January. That crash killed all 67 aboard and was the deadliest U.S. air disaster since 2001.
The industry also saw frightening incidents, such as a Delta Air Lines (DAL) plane flipping over on a runway in Toronto and passengers in Denver fleeing a burning American Airlines flight.
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The Trump administration and Elon Musk’s Department of Government Efficiency’s job cuts included the Federal Aviation Administration, which laid off 400 staffers last month.
The Professional Aviation Safety Specialists union said on March 17 that 132 probationary FAA employees, who were fired as part of DOGE’s cuts on Feb. 14, would be reinstated on March 20.
Citing “a shortage of top-notch air-traffic controllers,” Musk, CEO of Tesla (TSLA) and SpaceX, said on his X social-media platform that “[if] you have retired, but are open to returning to work, please consider doing so.”
Musk also said, without providing evidence, that current air traffic control technology is verging on “catastrophic failure,” putting air travelers’ safety at serious risk. And he suggested that his SpaceX company had the technology needed to replace a $2 billion contract.
All this has affected the flying public’s perception of safely, which heads of the major airlines have acknowledged.
“We saw a pretty immediate stall in both corporate travel and bookings and consumer confidence, and certainty air travel started to wane a little bit as questions of safety came in,” Delta Air CEO Ed Bastian said at an investor conference.
American said in a securities filing that “the revenue environment has been weaker than initially expected due to the impact of Flight 5342 and softness in the domestic leisure segment, primarily in March,” referring to the deadly Washington collision.
Analyst: airlines may see demand pullback
In addition to leisure travel, carriers have also noted a sharp decline in government travel since the start of the second Trump administration and its tariff and job-cut policies.
American Airlines CEO Robert Isom said fear wasn’t the only reason for the slowdown. Economic uncertainty is also playing a big part in the falling demand, he said.
Related: Airlines issue stark warning on travel demand as confidence sinks
Trump’s proposed tariffs are also sparking a backlash from Canadian travelers.
Nearly 60% of Canadians said they’re less likely to visit the U.S. this year than in 2024, according to a survey by the Canadian market researcher Leger. Some 36% of Canadians who’d had U.S. travel plans said they’d canceled them.
Citi analyst Stephen Trent updated his price targets for three major carriers on March 18, while maintaining his buy rating on the companies.
Trent lowered the firm’s price target on Delta Air Lines to $72 from $80.
In addition, the analyst cut the investment firm’s price target on Alaska Air (ALK) , which completed its acquisition of Hawaiian Airlines in September, to $81 from $83. And ot pared the target on American Airlines to $20 from $21.50.
Shares of all three air carriers are down double-digits year-to-date.
The analyst said he did not know the eventual outcomes of U.S. tariff policy or whether U.S. consumer concerns about economic conditions, international relations and aviation safety have reached a floor.
Although it is too early to say whether the U.S. airlines could see a sustained demand pullback, tariffs could further constrain industry capacity and support pricing, Trent said.
United Airlines (UAL) remains Citi’s favorite U.S. carrier, followed very closely by American.
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