North Atlantic aviation: gathering signs of weaker demand
In the 22-Apr-2025 update of its World Economic Outlook, the International Monetary Fund (IMF) cut its global growth forecasts. The US and Europe are forecast to have weaker GDP growth than any other major world region, which is likely to mean weakening demand for North Atlantic air traffic.
Indeed, there was a 17% year-on-year fall in visitors by air from Western Europe to the US in Mar-2025.
Schedules for 2Q2025 indicate that airlines are now starting to trim North Atlantic capacity.
A GBTA poll shows a halving of optimism levels among travel professionals between Nov-2024 and Apr-2025.
In addition to the softer economic outlook, sentiment for travel to the US has deteriorated. International unease with the Trump administration's geopolitics has been fuelled not only by record high tariffs, but also tighter border controls, its pronouncements on Canada and Greenland, and its unpredictability.
Summary
- The first signs of trimming of scheduled capacity on the North Atlantic in 2Q2025 are now evident.
- US airlines have not yet seen a fall in international bookings, apart from some weakness in Europe-originating sales.
- Visitors by air from Western Europe to US fell 17% in Mar-2025.
- GBTA poll: top concerns of travel professionals are costs and visas/documentation. Only 31% of travel professionals are optimistic, vs 67% in Nov-2024.
- IMF cuts world GDP forecast in “a highly unpredictable environment”.
First signs of trimming of scheduled capacity on the North Atlantic
According to data from CAPA - Centre for Aviation and OAG, seat capacity between Europe and North America scheduled for 2Q2025 has been trimmed by 0.2% over the past month Mar-2025. This is based on schedules filed in the week of 21-Apr-2025 compared with schedules filed in the week of 17-Mar-2025.
While the magnitude of this change is not yet very significant, the direction of the change - a cut - may be the first indication that airlines are starting to be concerned about this very important market.
The North Atlantic is a particularly important driver of profit for the leading European flag carrier airline groups: Lufthansa Group, IAG and Air France-KLM. This may mean that they are reluctant to cut capacity more aggressively until the signals are more conclusive.
It is less of a driver of US airline profits, but it plays a part.
US airlines have not yet seen a fall in international bookings…
In recent earnings calls both Delta Air Lines and United Airlines noted that there are no signs that international demand has been affected by changes in sentiment and market volatility.
For both airlines, c.80% of their long haul international sales originate in the US, and bookings are reported to be strong for the northern summer.
…apart from some weakness in Europe-originating sales
However, the 20% that originates outside the US is less firm, with United conceding "modest declines" in 2Q2025, and specifying a 6% year-on-year decline in Europe-originating traffic.
Moreover, Delta's partner Virgin Atlantic has recently spoken of a fall in US-originating demand for travel to Europe.
The big European groups - for whom sales originating in Europe are more important - are due to report their 1Q2025 earnings in late Apr-2025 and early May-2025, when commentary on their view of the outlook is likely to be given.
Visitors by air from Western Europe to US fell 17% in Mar-2025
There have already been hard data on weakening air travel demand on the North Atlantic (and for all air travel to the US).
Preliminary data from the US International Trade Administration for Mar-2025 show that the number of overseas visitors to the US fell by 11.6% year-on-year, with an 11% decline in overseas visitors by air.
Visitors by air from Western Europe to the US fell by 17.4% year-on-year in Mar-2025. This included a 14.8% decline from the UK, which is the biggest source of air visitors to the US.
Air visitors to the US from Spain, Norway, Germany, Ireland and Austria were down by more than 20%, and numbers from Iceland and Denmark fell by more than 30%.
Visitors to the US from Western Europe, Mar-2025
|
Country |
Count |
Percentage Change y-o-y |
|---|---|---|
|
846,577 |
-17.4% |
|
|
263,366 |
-14.8% |
|
|
130,915 |
-28.5% |
|
|
98,696 |
-5.1% |
|
|
75,482 |
-4.4% |
|
|
59,717 |
-24.5% |
|
|
37,701 |
2.0% |
|
|
36,997 |
-26.9% |
|
|
23,296 |
-26.4% |
|
|
21,324 |
-17.8% |
|
|
17,334 |
-18.3% |
|
|
14,853 |
-34.5% |
|
|
12,717 |
-19.2% |
|
|
12,352 |
-25.4% |
|
|
11,933 |
-23.6% |
|
|
8,507 |
-8.9% |
|
|
6,777 |
2.1% |
|
|
Other Western Europe |
5,339 |
-2.6% |
|
3,023 |
-36.6% |
|
|
2,865 |
-18.9% |
|
|
2,202 |
42.0% |
|
|
1,181 |
-44.0% |
Source: US International Trade Administration.
This was a significant deterioration from Feb-2025, when the decline was 2.3% from Western Europe (with a 5.2% increase from the UK), and it came before the 2-Apr-2025 tariff announcements.
These figures were adversely affected by the timing of Easter, which fell in March in 2024 and in April in 2025. The holiday around the Easter weekend typically generates travel demand, which was missed in Mar-2025.
Nevertheless, this is a significant drop, and it came before the 2-Apr-2025 tariff announcements. This suggests that other factors are also having an impact on demand.
GBTA poll: top concerns of travel professionals are costs and visas/documentation
According to a recent poll by the Global Business Travel Association (GBTA), the top concerns of travel professionals are both economic - business travel costs (54%), potential budget cuts (40%) - and regulatory, such as additional visas or documentation (46%).
GBTA polled travel professionals on the impact of recent US government actions: the online survey was carried out between 31-Mar-2025 and 8-Apr-2025; it published the results on 16-Apr-2025 and it had produced 905 responses from across the world.
Concerns such as employee willingness to travel to the US, and increased safety and duty of care (both at 37%), also rank highly.
GBTA poll: only 31% of travel professionals are optimistic, vs 67% in Nov-2024
The proportion of business travel professionals who are optimistic about the outlook for the industry in 2025 fell from 67% in Nov-2024 to 31% in Apr-2025.
Optimism is lowest among respondents in North America (28%) and Europe (29%).
GBTA poll: 29% of travel buyers expect lower travel volume in 2025
While 44% of travel buyers expect no change in the volume of travel this year, 29% expect a decline and only 9% expect an increase. Among those anticipating a decrease, the average expected drop in volume is 21%.
As recently as Feb-2025, almost half of GBTA respondents (48%) expected an increase in volume this year.
One third of travel buyers (33%) said that their companies have already revised their business travel policy to/from the US, or plan to do so, or are considering it. Among non-US companies, this proportion is 40%.
This suggests that expected travel volume could decline further.
GBTA poll: 37% of travel suppliers and intermediaries expect lower revenue
Among business travel suppliers and intermediaries, 37% expect a decrease in revenue this year, with only 7% expecting an increase (25% expect no change, and 31% don't know).
Any weakening in business travel on the North Atlantic will erode revenue in the premium cabins that underwrite airline profits in this market.
Accor: US summer bookings are down 25%
Other travel industry participants and observers are also talking of lower demand for travel to the US.
In early Apr-2025 the CEO of the hotels multinational Accor told Bloomberg TV that summer bookings from Europe to the US were down by 25%.
He cited "bad buzz" after reports of tourists being detained by US border authorities.
Late last year travel economists at Tourism Economics were projecting a 9% increase in international arrivals to the US in 2025.
In Feb-2025 they revised their forecast to a 5% decline, and in Apr-2025 it further cut this to a 9% drop.
IMF cuts world GDP forecast in "a highly unpredictable environment"
On 22-Apr-2025 the IMF revised its world GDP forecasts "markedly down", compared with its Jan-2025 projection.
It cut its forecast of global real GDP growth from 3.3% to 2.8% in 2025, and from 3.3% to 3.0% in 2026.
Both figures represent a slowing of growth from 3.3% in 2024.
Its 2025 GDP growth forecast is 1.8% for the US, 1.1% for the UK, and just 0.8% for the Euro area - slower than any other major global region.
This reflects the increase in "tariff rates to levels not seen in a century" and "a highly unpredictable environment".
North Atlantic demand is eroding
The unpredictable nature of the US administration further erodes sentiment towards visiting the US, already characterised by growing international discontent with its repeated expansionist attitude towards Greenland and Canada.
This is compounded by the tightening border restrictions for many travellers to the US. The result is further downward pressure on economic growth, due to limits on workforce mobility.
The very unpredictability of President Trump means that policy reversals are always possible. However, it seems likely that 2025 will continue to be characterised by economic weakness and border restrictions.
For air travel on the North Atlantic, and globally, the demand outlook is eroding.