President Donald Trump’s tariff policy has caused panic about resurgent inflation, but there seems to be one industry where prices are coming down: air travel.
According to the Bureau of Labor Statistics, airfare prices were down in March by 5.3% compared to the same time in 2024. That’s after declining 4% in February.
The BLS doesn’t assess the reason for the change, but airline CEOs say it’s economic uncertainty that is slowing travel demand, as Americans try to save money while facing a possible recession.
A wave of spring earnings reports from airlines made clear the industry is struggling amid tariffs, inflation, and shaky consumer demand, all of which forced them to rethink their 2025 expectations.
Luxury travelers are still flying, but price-sensitive flyers are holding back, the airlines said. Meanwhile, foreign tourism to the U.S. seems to be ebbing; March flights dropped 10% from the same time last year, per the Department of Commerce.
American Airlines (AAL) reported a Q1 adjusted loss of $0.59 per share on $12.55 billion in revenue — and yanked its full-year guidance after citing “unprecedented uncertainty” around trade policy and macroeconomic conditions. Domestic leisure demand, long a core revenue stream, took a hit, the airline said.
“Domestic leisure travel fell off considerably as we went into the February time frame,” CEO Robert Isom told CNBC, noting that price-sensitive travelers are pulling back.
Delta (DAL) also withdrew its 2025 forecast, even as it reported a $240 million profit and 6% year-over-year revenue growth. Premium and corporate demand held up — but broader growth, Delta warned, has stalled under the weight of tariffs and economic volatility.
Despite a revenue boost, Southwest (LUV) said it’s slashing its second-quarter capacity and slowing hiring, citing “ongoing uncertainty” tied to the U.S.-China trade war.
Additional reporting by Catherine Baab.
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