U.S. Airline CEOs Brace for Softer Demand, Economic Uncertainty as Summer Travel Season Approaches

Airline CEOs are warning of softer demand and economic uncertainty heading into the summer travel season, with rising consumer caution prompting capacity cuts and lower growth forecasts.

Speaking at the JP Morgan Investor Conference in New York this week, Delta Air Lines CEO Ed Bastian said Delta has cut its growth forecast in half — from 8% to 4% — due to several factors. Those include January’s severe weather, the American Airlines crash in Washington, D.C., that he called a “triggering event” for a stall in corporate bookings, and Delta’s crash at Toronto Pearson International Airport.

But there’s also been a drop in economic confidence, Bastian said, adding that Delta has seen “weakness in the economic indicators and consumer sentiment around travel.”

“It became pretty quickly obvious to us that there was more than just consumer sentiment coming out of the incidents,” he said. “There was something going on with economic sentiment, something going on with consumer confidence.”

As confidence has waned over the last few weeks, Delta has seen that economic sentiment hit short-term bookings the hardest. “We were seeing that very much in the close-in bookings. We were able to hold our advanced bookings at a decent clip, but it was the close-in that we were having a very difficult time closing,” Bastian said.

United Airlines CEO Scott Kirby echoed concerns about softening demand. “We’ve seen weakness in demand,” he said, adding that some of United’s key business segments have been hit particularly hard.

About 2% of United’s business comes from government travel, with another 2% to 3% tied to “government-adjacent” travel, such as consultants and contractors. Recent federal government cuts have dropped that segment by half for United — “a pretty material impact in the short term,” Kirby said.

While some routes, such as long-haul leisure travel to Hawaii, remain “really strong” for United, Kirby said there’s also some weakness bleeding into the domestic leisure market.

United is responding by trimming its fleet, retiring 21 aircraft — a move that should save about $100 million in maintenance costs this year.

The airline is also reducing capacity, particularly in weaker markets. That includes transborder routes from Canada — “a big drop in Canadian traffic to go into the U.S.” — and those government markets out of D.C. that are now seeing less demand.

Looking ahead, Kirby predicted airlines will increasingly focus on markets where they perform best. “I think five to 10 years from now, you’re going to have airlines concentrated in the places where they’re successful,” he said.

He added that economic turbulence will likely accelerate that shift. “I think the short-term turbulence is going to do the only thing it’s going to do — accelerate the endpoint,” he said, referring to a more balanced flight schedule and supply. While Kirby said that acceleration is due to “what looks like a tougher economic time ahead,” he added that United feels comfortable managing “through a downturn if it happens.”