Plane Tickets Are Getting Cheaper as Domestic Travel Demand Softens

If you're looking to book a flight within the U.S., there’s good news: plane tickets are getting cheaper.

Airline executives warned this month that demand for domestic travel is coming in weaker than they had anticipated earlier this year, forcing major carriers to adjust their strategies. Airlines are now rolling out off-peak fare sales and scaling back capacity growth plans for the second half of 2025.

According to the latest inflation report from the Bureau of Labor Statistics, airfare dropped 5.3% in March compared to the same time last year. That decline follows a 4% drop in February, suggesting that softer demand is starting to weigh on prices even during what are typically peak travel periods.

Economic Uncertainty Clouds Travel Plans

The travel slowdown is being fueled by broader economic uncertainty. Airline CEOs cited a range of factors — from President Donald Trump's unpredictable tariff policies to stock market volatility and overall economic unease — as reasons travelers are pulling back.

“Nobody really relishes uncertainty when they’re talking about what they could do on a vacation and spend hard-earned dollars,” American Airlines CEO Robert Isom said during the company's quarterly earnings call on Thursday.

Faced with too many available seats and lighter-than-expected demand, airlines like Delta Air Lines, Southwest Airlines, and United Airlines announced plans to curb their capacity growth after the upcoming summer season, which they still hope will be strong.

Meanwhile, Delta, Southwest, Alaska Airlines, and American Airlines all withdrew their 2025 financial forecasts this month, citing unpredictable economic conditions. United Airlines provided two outlooks — one assuming a recession, the other assuming continued growth — and said it expects to stay profitable under either scenario.

Corporate and Government Travel Also Weakens

Adding to the challenges, business travel — a critical revenue stream for airlines — has also slowed. Corporate customers, who typically book last-minute flights at higher fares, have pulled back spending amid the same economic uncertainties facing households.

“If uncertainty pops up, the first thing that goes away is corporate travel,” said Conor Cunningham, a travel and transportation analyst at Melius Research.

Delta CEO Ed Bastian had initially reported a 10% year-over-year growth in corporate travel early in 2025, but said that growth has since flattened.

Government travel has also taken a hit. Executives blamed reduced spending and mass layoffs across government sectors, driven by the Trump administration’s cost-cutting measures.

Airlines Respond With Lower Fares

Facing an oversupply of seats, airlines are lowering fares to fill planes. Alaska Airlines warned this week that weaker-than-expected demand would likely pressure its second-quarter earnings. Chief Financial Officer Shane Tackett told CNBC that while demand hasn’t collapsed, the carrier has dropped some fares to ensure planes stay full.

“The fares aren’t as strong as they were in the fourth quarter of last year and coming into January and the first part of February,” Tackett said. “Demand is still quite high for the industry, but it’s just not at the peak we all hoped would continue from last year.”

Executives noted that while economy class seats are seeing softer demand and lower fares, demand for premium seats — at the front of the plane — remains solid. Additionally, U.S. travelers continue to flock to international destinations, where demand remains much stronger.

Still, the overall mood across the industry remains cautious.

“Certainty will restore the economy, and I think it will restore it pretty quickly,” said American Airlines' Isom.

Until then, travelers can expect to find better deals when flying domestically — even if the skies ahead remain a little turbulent.