Early months of the US Trump administration produce mixed results for US airlines

As the US administration of the US President Trump nears six months in office, the policy effects on airlines seem mixed. The tariff tizzy created by the president has affected US domestic demand, and inbound international travel.

Yet at the same time, the expected lighter regulatory touch did materialise after the Department of Transportation dropped a Biden-era lawsuit against Southwest Airlines, and the agency does not appear to be prioritising other regulations introduced by the former Transportation Secretary, Pete Buttigieg.

But perhaps the current administration's greatest aspiration are its plans to introduce significant upgrades to the US' air traffic control system - a scheme whose success is far from certain.

Summary

• US airlines continue to navigate fallout from tariffs.
• Will there be a longer term shift in demand away from the US?
• For now, the current DOT doesn’t seem interested in upholding policies of the previous US administration.
• DOT has bold ambitions for ATC reform; will they become a reality?
• Airlines see some positive aspects of Trump’s governance, even as demand patterns remain uncertain.

US airlines weathered an unexpected bumpy start to 2025 as a tariff blitz took hold

One major theme that permeated recent earnings calls at US major airlines was that 2025 didn't start as expected.

The ever-changing stance from the US president, Donald Trump, on tariffs spooked some consumers, which led to a dampening demand among leisure travellers opting for economy class.

Most US airlines have opted to pull their full-year guidance and adjust capacity downward.

But they also signalled that trends were stabilising as 1Q2025 came to a close, and data from CAPA - Centre for Aviation and OAG show that domestic departing frequencies remain higher year-over-year through the end of Oct-2025, based on published schedules in late May-2025.

United States of America: weekly total domestic departing frequencies, from 2020 to late Oct-2025*

Source: CAPA - Centre for Aviation and OAG.

* These values are at least partly predictive up to 6 months from 26-May-2025 and may be subject to change.

And even as point of sale for inbound US travel also softened, the large global US airlines - particularly Delta Air Lines and United Airlines - highlighted that 80% of their international seats are US point of sale, while American Airlines is at approximately 75%.

Will a shift in demand away from the US materialise into a longer term trend?

Still, the travel industry at large remains concerned about the repercussions of US tariffs and general negative sentiment towards the country.

Both fallout from tariffs, and discontent over the US president's comments about making Canada the 51st state, have dented US transborder demand, largely on point-to-point leisure routes. Expedia Group CEO Ariane Gorin recently said that "Visits from Canada into the US were down 30%" in 1Q2025, adding: "That's a big deal for a lot of our hotel partners and airline partners".

But the bigger question is whether a more long term shift in demand patterns will occur.

Air Canada redeployed some capacity from US leisure markets to the Caribbean and Mexico during 1Q2025 and is making a significant push into Latin America for the upcoming northern winter season, with 16% capacity growth, four new destinations, and 13 new routes.

"As we go forward, we'll mature into the capacity that we've reallocated elsewhere. And for 2026 right now, it's a bit too early to speculate exactly what the market will look like," said Air Canada Chief Commercial Officer Mark Galardo.

See related CAPA - Centre for Aviation report: Air Canada's network diversification efforts create a buffer against falling US demand

Will DOT's lighter regulatory touch towards airlines remain in place?

As US trade policy continues to cast uncertainty over demand patterns, a recent decision by the country's Department of Transportation (DOT) perhaps offers a clue into how the current administration will approach regulation of airlines.

The DOT recently dropped a lawsuit against Southwest Airlines filed by the administration of the former president, Mr Biden, accusing the airline of operating two chronically delayed flights.

Southwest and the DOT began discussions in Mar-2025 to resolve the litigation, and after the agency dismissed the lawsuit, Southwest stated that it appreciated the decision. The airline said that those two flights occurred at a time when the industry "faced unprecedented challenges from the COVID-19 pandemic, and were delayed due to issues outside of Southwest's control in numerous cases".

Former Secretary Mr Buttigieg also introduced an ancillary fee disclosure ruling, mandating "clear and conspicuous" disclosure of ancillary fees at the outset of an itinerary search that was scheduled to take effect in the summer of 2024.

But as Aviation Week Network has reported, the industry trade group 'Airlines For America' mounted a legal challenge against the regulation, and in Jan-2025 an appeals court concluded: "In estimating net benefits of such a mandate, DOT relied on a study that was not available during the notice-and-comment period, giving airlines no opportunity to challenge its data."

Additionally, the study "was based on the preferences of students...", the ruling noted, "...yet DOT used it to calculate cost-benefit estimates with respect to all airline customers".

That court opted to leave an earlier stay in place, and remanded the rule back to DOT to give the petitioners an opportunity to comment on the new data.

At this stage the DOT, now led by the current Secretary Sean Duffy, has not opted to render any final decision on the ruling, and appears to be focusing its attention elsewhere.

Airlines praise DOT's lofty ambitions for a US ATC overhaul

Most of DOT's attention is currently deployed on an overhaul of the US air traffic control system, after high-profile outages at Newark Liberty International airport, as well as the tragic crash of a US military helicopter and an American Airlines regional jet at Washington National Airport in Jan-2025.

DOT's goals include building six new 'Air Route Traffic Control Centers' (ARTCC) to consolidate and reduce the 21 current centres responsible for managing high-altitude air traffic. And 15 new towers and co-located Terminal Radar Approach Control (Tracon).

Additionally, the plan also aims to accelerate FAA's time for transitioning its telecommunications backbone to Internet Protocol (IP)-based systems, from services based on time-division multiplexing technology, which commercial providers are discontinuing, Aviation Week Network reported.

Mr Duffy said that the DOT was also aiming to install new telecom and new fibre throughout the system. This is in addition to new radios on towers and new ground radar, and new sensors on tarmacs and at airports.

The Transportation Secretary tabled a three-to-four year timeframe to accomplish those goals at an undisclosed cost.

It's a lot to accomplish in a short period of time without guaranteed funding for the scope of DOT's aims, and the contracting and testing process of new equipment could exceed the agency's stated timeframe.

Obviously, numerous details need to be hashed out, and the ATC upgrade plan has its rightful sceptics, but it has received public support from the CEOs of American Airlines, United Airlines, Delta Air Lines, Southwest Airlines and JetBlue Airways.

The reality is that: after the string of events that occurred shortly after Mr Duffy took office, the agency had to spring to action and display a conviction to improve an antiquated system that - despite current arguments put forth by DOT - other administrations have tried to improve.

Perhaps the only certainty is that the next few months of the US Administration could be as eventful as the last

To say that Mr Trump's first few months in the office of president have been eventful is an understatement.

The aviation and aerospace sectors are facing uncertainty on multiple fronts, and the ultimate outcome of the US president's policies on those industries is tough to predict.

But for now, US airlines seem encouraged by certain aspects of policies that are shaping up, even if the next few months could be eventful as the last.