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Affluent consumers, seen as the most resilient segment of travelers, are spending significantly less on airline tickets, according to new credit card data, signaling a potential threat for an industry that has banked on premium customers seeing them through these economic turbulent times.
Photo illustration of luxury first class.
Credit card spending on airline tickets by high-income consumers—those making over $150,000 annually—saw a 7% step down in growth over the 35 days leading up to May 25, according to new data from Consumer Edge, a provider of consumer spending data.
Lower-income consumers had already pulled back on airline spending immediately following the announcement of Liberation Day tariffs, April data showed.
The May data shows a reversal from March and April, as “the highest-income group went from the best growth rate to the worst, and if that persists, that could be a problem [for airlines],” Michael Gunther, VP and head of insights at Consumer Edge, told Forbes.
This data “might be a potential forward indicator, because if a weakness is being seen today in the spend, that's probably forward bookings,” Savanthi Syth, an analyst at Raymond James covering the airline sector, told Forbes.
On first-quarter earnings calls in April, major U.S. airlines universally acknowledged that the uncertain economy had created significant weakness in demand for “main cabin,” or economy seats, but they insisted that demand for premium seats remained strong.
For first and business class flying, revenue per kilometer (RPK, calculated by multiplying the number of paying passengers by the distance traveled) declined by a massive 26.2% year over year in North America, far outstripping the 4.2% decline seen globally, according to an April market analysis by the International Air Transport Association (IATA), a global trade association representing airlines.
This year is shaping up to be a disappointment for America’s airline industry. As recently as January, major U.S. airlines were forecasting revenue growth in 2025 compared to 2024. But by mid-April, a shaky economy, exacerbated by President Donald Trump’s Liberation Day tariff announcement, compelled Delta, American, Southwest and JetBlue to pull their full-year guidance for 2025, while United Airlines hedged by offering dueling outlooks: one if there is a recession and another if not. Since the start of the year, the Dow Jones U.S. Airlines Index is down 13%. United and Delta stock are down 11% and 13%, respectively, while American and JetBlue shares are down 30% and 33%, respectively, since the beginning of the year.
So far, so good, insist the airlines. “International trends continue to be strong,” American Airlines CFO Devon May said last month at the Wolfe Research Global Transportation & Industrials Conference, adding that the carrier expects positive revenues from that segment in the second quarter. Acknowledging declines in inbound demand from Canada and Europe, Andrew Nocella, United Airlines’ chief commercial officer, noted in April that “U.S.-origin demand has more than compensated for these reductions.”
It’s unclear if American travelers’ appetite for foreign destinations will wane, given the greenback has tumbled 6% year over year, according to the DXY, an index that measures the dollar against a basket of foreign currencies. Compared to this time last year, the dollar is down 5% versus the euro, 6% against the pound sterling and down 8% versus the Japanese yen. That means Americans will pay more on the ground compared to last year when they visit these countries.
Strong premium demand in recent years inspired many airlines to overhaul cabin interiors across their fleets to give a bigger presence to premium features like lie-down seats. In their first-quarter earnings reports, airlines continued to bank on premium to compensate for softening demand for “main cabin,” or coach seats. For example, Delta Air Lines president Glen Hauenstein told investors in April that “in a recessionary climate, premium demand has shown greater resilience compared to main cabin demand.” This new data from Consumer Edge may expose a chink in that armor. “A lot of international flying is already bought for the summer, right?” Syth told Forbes. “But what happens after the summer? And so it's interesting—this is kind of the first data point for that higher-income household that I've heard as seeing softening.”
The hotel industry is also being impacted by lower consumer confidence. Last week, CoStar and Tourism Economics downgraded their joint U.S. hotel forecast for 2025, now projecting only 1% growth in revenue per available room (RevPAR), down from 1.8%, citing cooling demand and increased risk factors such as weaker leisure and corporate travel.
Trump's Tariffs Sent U.S. Airline Bookings Into A Tailspin, New Data Show (Forbes)