A ‘Very Rapid’ Drop In Domestic Demand Is Hitting Airlines

The skies aren’t looking so friendly these days.

Southwest, American and Alaska were the latest airlines to express caution about the rest of the year, pulling their outlooks for 2025 and beyond amid flagging demand for domestic flights.

Southwest Airlines (LUV) CEO Bob Jordan said Thursday the drop-off in business detected in February was one the most pronounced he has seen. “That is a very rapid fall-off,” he said on CNBC. “It’s probably the most that I have seen absent COVID.”

The carrier believes economic unease, rather than Southwest’s plans to charge baggage fees or assign customers seats, has weighed on sales, Jordan said.

“A lot of that is, I think, the consumer reaction to the tariffs,” he said on CNBC: “Some of that could be front-running the tariffs in terms of spending money in other locations. So it could snap back.”

American and Alaska also adjusted their full-year outlooks, joining other carries—including United (UAL) and Delta (DAL)—in making similar adjustments. (United recently offered “bimodal” guidance that accounted for the possibility of a recession, while Delta declined to affirm its projections for the year ahead.)

Southwest on Wednesday pulled its annual targets for 2025 and 2026 and announced plans to “proactively” reduce capacity. Domestic travel is a bigger part of Southwest’s business than its competitors, it said in a press release.

American, Alaska Also Adjust Their Outlooks

American (AAL) also withdrew its full-year guidance on Thursday. The company cited weak domestic sales, particularly in the main cabin and from third-party online travel sites—often used to comparison-shop—on an earnings conference call Thursday. (Executives estimate a fatal crash in January was responsible for $200 million of the $473 million loss last quarter, but they no longer anticipate it affecting sales.)

Those are “our most price-sensitive customers,” Chief Strategy Officer Stephen Johnson said, according to a transcript made available by AlphaSense. “We’d like to think that’s demand that’s not been lost, but demand that’s on the sidelines waiting to understand which direction the economy is going.” 

Alaska Air Group (ALK) declined to update it’s full-year forecast beyond the current quarter while releasing its first-quarter results Wednesday.

DeltaCEO Ed Bastian in early April said Americans were behaving as if they were in a recession. Although cheaper seats have gone unfilled, premium and international tickets bought more often by the well-off have continued to sell well, Delta, United and other carriers have said.