What was initially expected to become a very lucrative and successful year for the airline industry might turn out to be a disappointment for many US airlines. Due to Trump’s sweeping tariffs and fears of a recession, US travellers are less inclined to take to the air.
Previously, there had already been a decline in the arrival of Canadian and European travellers due to the tighter application of entry policies by the US immigration office. Those measures didn’t concern most of those travelling within the US but the greater fear of recession (53% of American citizens are concerned about the possibility of a recession) seems to now touch both international and domestic travellers.Â
“In recent weeks, there have been numerous news stories about tourists cancelling trips to the US in protest of the perceived heavy-handedness of recent trade policies. This points to potentially another channel to consider in assessing the effects of tariffs on economic activity,” wrote Michael Feroli, chief US economist at J.P. Morgan.
Less bookings, less flights
American Airlines became the latest US airline to withdraw its 2025 financial guidance on Thursday, following similar moves by Southwest and Delta. All three airlines cited a decline in bookings from economy leisure travellers as a major factor in their increasingly cautious economic outlook.
“We came off a strong fourth quarter, saw decent business in January, and really domestic leisure travel fell off considerably as we went into the February time frame,” said American Airlines CEO Robert Isom during an interview with CNBC.
After withdrawing its financial guidance, American Airlines stated it would provide an update as soon as “the economic outlook becomes clearer”. Airline executives indicated that sales among business travellers and premium seats on long-haul international flights remained solid for now.
Both Southwest Airlines and United Airlines have already announced plans to reduce their flight schedules for the second half of the year. Southwest stated it would trim its flight schedule due to lower demand and was unable to reaffirm its 2025 and 2026 outlooks due to “current macroeconomic uncertainty”.
United Airlines took an unusual step by issuing two different financial forecasts for 2025—one assuming a recession and one assuming continued economic growth. United plans to reduce its scheduled domestic flights by 4% starting in July in response to weaker demand for economy fare tickets. CEO Scott Kirby noted: “We think there is a reasonable chance things can weaken from here.”
Meanwhile, Delta Air Lines, which had initially planned a flight expansion for 2025 and was optimistic earlier this year, has now paused those plans after reassessing market conditions.
The slump in domestic air travel, combined with broader economic indicators such as a slowdown in home sales and US consumer sentiment dropping for four consecutive months, suggests that US citizens are consuming less overall. However, fears of a downturn have not yet translated into widespread layoffs.
Trump’s announcement of sweeping tariffs on 2 April triggered panic in financial markets and spurred recession fears, prompting consumers and businesses alike to cut back on spending—including travel. Although Trump later announced a 90-day partial hold on some tariffs, the overall increase in import taxes, particularly against China, exacerbated concerns. In retaliation, Beijing raised its import tax on American goods to 125% and denied claims that negotiations were ongoing.
Canadian travel boycott deepens
The downturn in US tourism is not limited to domestic travellers. Canadian travel to the United States has significantly declined, driven by growing unease with President Donald Trump’s policies and rhetoric. Many Canadians are choosing alternative destinations such as Mexico over the US, citing discomfort with Trump’s trade war, insults toward Canada, and reports of mistreatment at US border crossings. Notably, incidents of tourists being detained for minor reasons have heightened anxieties.
Data shows a 22% year-over-year drop in Canadian land border crossings in March, and Air Canada reports a 10% decline in bookings to the US for the spring and summer months. Canadian flight reservations to the US have dropped by 70% for the April–September 2025 period, with airlines like WestJet and Air Canada cutting back US-bound flights and redeploying aircraft to European and Caribbean routes. Smaller carriers like Porter Airlines have also reduced US operations and shifted capacity to domestic markets.
This boycott is having a significant economic impact. Canadians spent $20.5 billion in the US in 2024, supporting 140,000 American jobs. A 10% reduction in Canadian travel could result in billions of dollars in lost revenue for the US travel and hospitality industries if the trend persists.
International tourism slump
The decline in tourism extends beyond Canada. International tourism to the United States has seen a significant decline in recent months, attributed to the policies and rhetoric under President Donald Trump’s administration. Travel experts highlight that fears related to immigration enforcement, political instability, and increased border scrutiny are deterring global visitors.
In March alone, overseas visits to the US dropped by 11.6% compared to the previous year, with notable falls from countries like Colombia (33%), Germany (28%), and Spain (25%). This downward trend affects key tourism markets from Europe, Central America, and the Caribbean. The economic ramifications are severe, with the US Travel Association estimating that a 10% drop in Canadian tourism alone could risk 140,000 jobs and result in $2.1 billion in lost revenue, with potential losses reaching $6 billion at a 30% decline.
Experts caution that if these patterns continue, the US risks massive losses in tourism revenue and employment, and may lose its position as a leading global travel destination.
