Aviation Analyst Sees Long-Term ‘Demand Destruction’ From Trump Tariffs

An aviation industry analyst believes air travel could face “demand destruction” as a result of the Trump administration’s tariff policies. 

Visual Approach Analytics said Thursday the White House’s “deep step toward deglobalization will negatively impact commercial aviation, which is built to connect the globe.” Demand has already begun to soften, with international travelers visiting the U.S. down 25% from Canada and Mexico, and an estimated 10% worldwide, the firm added. “We believe the threat to aviation is in demand destruction, a long-term impact largely dependent upon economic scenarios,” it said.

In the short term, this could benefit U.S. airlines, which have a relative point-of-sale advantage, Visual Approach said. Delta Air Lines (DAL), for instance, said on its first-quarter earnings call Wednesday that it has seen strong summer bookings, according to a transcript provided by AlphaSense.

Delta ‘Will Defer Any Deliveries That Have a Tariff’

In the longer-term, however, growth is likely to fall, the analyst said. With tariffs in place, aircraft made for American carriers outside the U.S. are “likely to be parked,” VAA said, adding that “the incentive for the U.S. airlines is to stall for time while the uncertainty is eventually resolved.” Delta CEO Ed Bastian said on the earnings call that the carrier no longer envisions growing this year and “will defer any deliveries that have a tariff.”

Shares of Delta sank 11% in recent trading, while rivals American Airlines (AAL), United Airlines (UAL) and Southwest (LUV) dropped 13%, 12%, and 10%, respectively, amid a broad market sell-off.