Airline Industry Already in Recession, Says Southwest CEO, and More

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Southwest CEO Declares Airline Industry Recession as Domestic Travel Demand Plummets

Southwest Airlines CEO Bob Jordan has declared that the U.S. airline industry is already experiencing a recession, citing unprecedented drops in domestic leisure travel demand outside of pandemic times.

The airline expects second-quarter revenue to fall by six percentage points, following a three-point decline in the first quarter, prompting Southwest to withdraw its financial guidance for both 2025 and 2026.

Key Points

• Jordan specifically cited tariffs and eroding consumer confidence as major factors impacting demand

• Other major carriers, including American, Alaska, and Delta, have also pulled their 2025 forecasts

• Southwest is particularly vulnerable due to its heavy reliance on domestic leisure travelers

• The airline is cutting domestic flight capacity for the second half of 2025

• Cost-saving measures include 1,750 layoffs announced in February and the upcoming introduction of baggage fees (May 28)

• Southwest estimates its new revenue initiatives will generate $1.8 billion in EBIT in 2025

What It Means

The airline industry's current struggles may be an early warning signal for broader economic difficulties in the US economy.

Southwest's actions, cutting capacity, implementing fees, and reducing workforce, reflect fundamental shifts in its business model in response to prolonged economic pressure.

Other Key Aviation Industry Updates for Today 👇

2. Cathay Pacific Launches Hong Kong-Dallas A350 Service

Cathay Pacific inaugurated non-stop flights between Hong Kong and Dallas-Fort Worth on April 24, 2025, marking its 6th new destination this year.

Operating four weekly round-trips using Airbus A350-1000 aircraft, the route strengthens Hong Kong's global hub position and offers connections throughout Asia-Pacific and the Americas.

This expansion is part of Cathay's aggressive growth strategy, with plans to exceed 100 destinations by mid-2025 and several more route launches scheduled throughout the year.

3. Air India in Talks for 10 Boeing Jets Rejected by Chinese Airlines

Air India is negotiating with Boeing to acquire approximately 10 Boeing 737 MAX aircraft originally intended for Chinese carriers but rejected amid escalating US-China trade tensions.

This opportunity arises as Chinese airlines decline deliveries due to newly imposed tariffs, creating a window for Air India to expand its fleet.

The acquisition aligns with Air India's fleet modernization strategy and follows a similar scenario from 2019, when the carrier benefited from previous US-China trade conflicts.

4. China Grants Tariff Exemptions for Aircraft Engines Amid Trade War

China has decided to exempt aircraft engines and parts, including nacelles and landing gear, from import tariffs amid the escalating trade conflict with the United States.

The announcement came from Safran CEO Olivier Andriès, who confirmed China's decision to grant tax exemptions on aerospace equipment deliveries.

This move protects China's aviation industry from supply chain disruptions while maintaining access to critical components from global manufacturers, despite broader trade tensions.

5. Thai Airways Expands Daily Bangkok-Oslo Flights as Nordic Hub Grows

Thai Airways International is strengthening its role as a key connector between Nordic countries and Asia-Pacific by offering daily direct flights between Bangkok and Oslo.

The route provides seamless connections to other Nordic capitals and throughout Asia, supporting both business and leisure travel.

This development coincides with the 120th anniversary of Thai-Norwegian diplomatic relations, with Thai Airways supporting commemorative events including a charity run in Oslo on June 22, 2025.

6. Indian Airlines Face Higher Costs Due to Pakistan Airspace Ban

Pakistan has closed its airspace to Indian airlines following recent tensions, impacting over 800 weekly flights.

The ban, effective until May 23, 2025, forces Indian carriers to take longer routes for international flights, increasing operational costs and journey times.

This mirrors a similar 2019 ban following the Balakot airstrikes, which lasted several months.

Airlines are now preparing alternative routing plans while passengers face potential fare increases and extended travel times on international routes.

7. American Airlines Negotiates Future Growth at Expanding Charlotte Hub

American Airlines is negotiating a new lease agreement with Charlotte Douglas International Airport (CLT) for summer 2026, which will determine future construction projects.

CLT, now the 6th busiest airport globally with 596,583 operations in 2024, is completing several major projects including terminal expansion and a fourth runway by 2027.

Potential future developments include a third A concourse, extensions to B and C concourses, and possibly a second entrance.

American currently operates 671 peak-day departures from CLT, its second-largest hub, and recently added new seasonal service to Athens and Aspen.

8. Southwest Pushes 27 Boeing 737 MAX 7 Deliveries to 2026

Southwest Airlines has rescheduled the delivery of 27 Boeing 737 MAX 7 aircraft from 2025 to 2026 due to ongoing certification delays.

The carrier now expects to receive 136 aircraft in 2025, including 70 MAX 7s and 66 MAX 8s, while adding seven new options for MAX 7 deliveries in 2026.

Southwest remains committed to transitioning to an all-MAX fleet by 2031, replacing its aging 737-700 and 737-800 Next-Generation jets.

9. Phenix Jet Achieves First Business Jet Temporary Registration in Asia

Phenix Jet Cayman has completed the first-ever temporary registration for a business jet in the Asia-Pacific region.

The milestone process was accomplished in just five days at Singapore's Seletar Airport, establishing a new efficiency benchmark for aircraft transitions in Asia.

This achievement follows Phenix Jet's expansion into Southeast Asia with its Singapore branch located at Seletar Airport, providing strategic access near Bombardier's Singapore Service Centre and enhancing service capabilities across the region.

10. Apollo and Moonrock Launch $100M Liability Coverage for Drone Industry

Apollo has partnered with UK-based Moonrock to introduce a comprehensive insurance solution for the drone and eVTOL industry, offering up to $100 million in liability coverage and $22.5 million in property damage protection.

The facility, backed by major insurers including AEGIS London, AXIS, and Beazley, caters specifically to complex drone operations and emerging aviation technologies like air taxis and cargo delivery systems.

This breakthrough addresses the growing demand for higher coverage limits in advanced aviation and supports the rapidly evolving drone passenger services sector.