People move through Newark Liberty International Airport following a news conference by Transportation Secretary Sean Duffy at the airport, where he announced the reopening of a major runway at the airport, nearly two weeks ahead of schedule on June 2, 2025 in Newark, New Jersey.
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Millions of travelers are expected to fly over the July 4 holiday period, but the outlook for the rest of the year still looks murky as airlines wrestle with too many flights and not enough demand.
“The summer is on sale, which certainly implies lower fares,” Southwest Airlines CEO Bob Jordan said in an interview late last month.
Domestic airfare this summer is averaging $265 for a round-trip flight, down 3% over last year and the cheapest since 2021, according to fare-tracker Hopper. Airfare in the May U.S. inflation report was down more than 7% from a year ago.
Southwest and a host of other airlines — Delta Air Lines, American Airlines and Alaska Airlines — pulled their forecasts for 2025 earlier this year, blaming an uncertain economic backdrop with the Trump administration’s on-again-off-again tariffs
Things might not be much clearer now as Delta kicks off airline earnings next Thursday, with other carriers set to report later this month.
“We’re stable where we are, but we have not seen an inflection back,” Jordan said.
In response, airlines have outlined plans to cut unprofitable flights, particularly on off-peak days after the major summer travel season. Airlines make the bulk of their profits in the second and third quarters of the year.
From last Tuesday through next Monday, the Transportation Security Administration said it expects to screen more than 18.5 million travelers at U.S. airports, though no single day is expected to top the nearly 3.1 million travelers that went through checkpoints on June 22, an agency record.
While a sharp economic downturn hasn’t materialized, air travel demand hasn’t been as strong as some industry members expected last year or in early 2025. On Thursday, U.S. jobs data came in stronger than expected despite some signs of a slowdown in the labor market a day earlier.
“While the broader macro environment has been more resilient than feared, overall airline industry demand has been tepid,” TD Cowen analyst Tom Fitzgerald said in a Wednesday note.
Debit and credit card spending tracked by Bank of America showed an 11.8% decline on air travel spending last month from a year earlier in June, after five months of year-on-year declines.
“Debit and credit card data for spend on airlines has been down slightly more in June than April/May, so we are not expecting a meaningful sequential improvement in revenue trends,” Bank of America analyst Andrew Didora said in a Tuesday note. “We believe investors will be looking for commentary on any green shoots in demand, and any further commentary on 2H25 capacity cuts could be viewed positively.”
International trips originating from the U.S. have been a strong corner of air travel and a boon for big global carriers like Delta, American and United Airlines.
But fares have eased for trips abroad, too. International flights from U.S. airports are up 4.3% from last summer, according to Hopper. Fares from the U.S. to Europe are averaging $817, down almost $100 from last year, and on par with 2019, Hopper said. Flights to Asia were going for $1,328 on average in June, July or August, down 13% from last year, Hopper data show.
