Airlines in the US are curtailing its winter schedules amid economic concerns over inflation, unemployment, and the impact of tariffs imposed by Donald Trump. More examples of capacity reduction are emerging, with today’s announcement about Delta shifting capacity from the New York market for the winter season.
Delta Air Lines has cut nearly 20% of its winter schedule in January and February from New York as demand for air travel is cooling. These reductions primarily result from softening demand for domestic flights during the winter months, typically a period in which snowbirds fly south.
Delta has cut about 10% from its November-December and March-April winter schedules, with the peak cuts of 16% of flights from Kennedy (KJFK) and a 19% cut at LaGuardia (KLGA) in the winter schedules for January and February of 2026.
A change to FAA slot rules at Kennedy and LaGuardia airports through summer of 2026 enables reductions by eliminating normal “use it or lose it” rules for slots. As a result, airlines can reduce frequencies without the risk of losing their valuable slots at these normally constrained airports.
While Delta is not eliminating any markets, it will reduce frequencies for some markets, which will result in fewer choices and lower capacity. This comes as several carriers are reducing capacity and curtailing winter schedules, lowering overall capacity in the hope that yield levels can be maintained. Spirit Airlines, a low cost carrier, issued a going concern warning this week over the deterioration in travel demand. Other airlines, including United, American, Southwest, and Frontier have also reduced capacity in 2025. Perhaps the OEMs inability to produce new aircraft at planned rates will have a small silver lining for their US-based customers.
The Trend is Clear
Advanced booking are weakening for winter season travel, particularly for economy class seats from cost-conscious travelers. While business traffic and premium leisure traffic steady, it appears that vacations are being pushed back or cancelled in the midst of economic uncertainty. The recent downturn in job creation statistics, despite Trump’s blaming the messenger, also reflect a weakening economy as we come closer to full implementation of the Trump tariffs having an impact on the economy.
Of course, those who read history know about how the Smoot-Hawley tariffs led to the Great Depression and how the early signs are suggesting that history may repeat itself. If nothing else, the government job cuts from DOGE, the uncertainty over inflation from tariff policies, and uncertainty as to when and how the impacts of tariffs will hit consumers, travelers are simply not booking at the same levels that we saw under Biden in 2024.
All politics aside, negotiating in public and the off-and-on vacillation on tariffs and rates by the Trump administration have created an atmosphere of uncertainty in which people are cutting back on expenses, whether justified or not. Perception is everything, and the “I don’t know or I can’t tell” perception engenders spending caution.
What this Means
The early economic indicators are showing recession, and potential growth in inflation that could lead to the feared “stagflation” that we haven’t seen since the 1970s. With inflation set to increase from tariffs, at least in the short term, rising unemployment, and slowing economic growth, the signs are moving in the wrong directions.
Airlines are a bellwether for the economy, as with booking a year in advance, they can sense changes in the economy. Clearly, the airlines believe that economic conditions are changing as they see weakness in forward bookings for economy leisure travel. As more carriers evaluate their winter schedules, we can expect further capacity reductions as airlines attempt to better match capacity to declining demand, and reduce their full-year earnings guidance. It will be interesting to watch third quarter results and capacity reductions during the remainder of 2025.
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