By Panos Mourdoukoutas

Despite a shaky start earlier in the year, U.S. airline travel reached another milestone during the 2025 winter holiday season. Major airlines are expected to carry 52.6 million passengers over the 18 days from Dec. 19 to Jan. 5, according to a forecast released by Airlines for America.

While full-year data are not yet available, figures from the Bureau of Transportation Statistics indicate that travel demand remained broadly steady in the 12 months ending September, roughly in line with the previous year. U.S. scheduled carriers transported approximately 979.8 million domestic and international passenger enplanements, or passenger boardings, compared with about 983 million in 2024, a record year for airline travel.

Headwinds and Tailwinds

“The airline industry had some challenges this year. At the start of the year, air travel declined sharply,“ Steve Schwab, CEO of Casago, told The Epoch Times. ”This came alongside an increase in road trips. Whether due to financial or broader uncertainty, many people chose to travel differently.”

“There was also a slight decline in international travel to the U.S. In the second half of the year, domestic demand for air travel improved a bit, but then, of course, we had the government shutdown, which had such a significant impact on air travel and airports.”

At the same time, the industry benefited from several tailwinds, including a resilient economy supported by strong consumer spending that defied earlier pessimistic forecasts.

According to an economic report released on Dec. 23, consumer spending rose 3.5 percent in the third quarter, the most substantial increase of the year, compared with 2.5 percent in the second quarter. Growth was driven by both goods and services, with international travel among the leading contributors within the services sector.

Another supportive factor for airline demand was a modest decline in airfares. Average fares fell 1.2 percent in the first quarter and 3.8 percent in the second quarter compared with the same periods in 2024, according to the Bureau of Transportation Statistics.

Lower fuel costs played a significant role in easing pricing pressures. Jet fuel prices averaged about $89 per barrel in the first half of 2025, down from $106 per barrel in early 2024, according to the International Air Transport Association. For the full year, jet fuel prices are expected to decline about 9 percent to roughly $90 per barrel.

Steady travel demand and lower fuel expenses helped most major U.S. airlines report solid revenues and earnings in 2025, with the notable exception of American Airlines.

Delta Air Lines’ financial performance offers a snapshot of the broader industry’s condition. On Oct. 9, the Atlanta-based carrier reported record operating revenue of $16.7 billion for the quarter ending September. The company expects full-year adjusted earnings per share of about $6, toward the upper end of its July guidance.

A key driver of improved profitability at Delta and other large carriers has been a greater focus on monetizing aircraft cabins by expanding seat options, including new premium and premium select products that command higher fares.

“Delta’s competitive advantages and differentiation have never been more evident, and thanks to the hard work of our people, we continue to elevate the customer experience and extend our industry leadership,” Delta CEO Ed Bastian said in the report. “We delivered September quarter results at the top end of our expectations on a combination of strong execution and improving fundamentals.”

Optimism Toward 2026

Bastian expressed optimism heading into the new year, citing continued revenue growth and margin expansion.

Supporting Delta’s outlook for 2026 are several large-scale events expected to drive increased travel to the United States, including the 2026 FIFA World Cup, America’s 250th anniversary, the 2028 Summer Olympics in Los Angeles, the men’s and women’s Rugby World Cups in 2031 and 2033, and the 2034 Winter Olympics in Salt Lake City.

The U.S. Travel Association forecasts a 3.7 percent growth for 2026.

On a global scale, the International Air Transport Association projects that 2026 will be another record year for airlines, with combined net profits expected to reach $41 billion, up from an estimated $39.5 billion in 2025.

However, the transport association expects industry profit margins to remain unchanged at 3.9 percent. Net profit per passenger is forecast at $7.90, below the 2023 peak of $8.50 and flat compared with 2025.

As a result, returns on invested capital are projected at 6.8 percent, unchanged from 2025 and below the weighted average cost of capital, estimated at 8.2 percent for 2026.

When returns fail to exceed the cost of capital, companies erode rather than create value for capital holders. This dynamic helps explain why airline stocks underperformed in 2025 despite solid earnings. Shares of Delta and United Airlines rose more than 13 percent over the past 12 months, below the gains in the S&P 500.

That balance could shift in 2026 if interest rates decline, lowering capital costs, while increased international travel linked to significant events boosts returns.

Anton Radchenko, CEO and co-founder of AirAdvisor, highlighted another potential tailwind that emerged in 2025: improved operational reliability.

“Based on the latest available statistics covering January to September 2025, only 1.51 per cent of flights were canceled,” he told the Epoch Times. “During the same time periods in 2024 and 2023, 1.58 percent and 1.63 percent of services were grounded.”

“If this trend continues, then the hope for consumers is that flight punctuality and reliability will continue to improve, and part of this may be due to government investment into the aviation sector starting to show results,” he continued. “The big swing factor for 2026 is ATC capacity: staffing shortages and system constraints can quickly amplify localized disruptions, but continued modernization and hiring momentum could make flight schedules more predictable into 2026–2028.”