![\"\"](\"https://content.ibisworld.com/media/5avbb1xf/shutterstock_2559682633.jpg?rmode=max&width=720&height=480\")
Air travel is reshaping everything from shipping lanes to hotel lobbies, with fluctuating capacity, shifting demand patterns and rising operating costs filtering through the broader economy. Whether through surcharges embedded in airfares, the rerouting of global logistics networks or the ebb and flow of international visitor volumes, aviation dynamics now influence planning and performance across multiple sectors. To unpack how these forces are playing out, three IBISWorld analysts share their perspectives on the industrywide ripple effects:
\nTogether, their insights reveal how global aviation trends are reshaping competition, demand and strategic risks across interconnected markets.
\n\n
\n
Seth Lee: The aviation industry is navigating a period of demand recovery by maintaining a sizable fleet and adopting pricing models commonly used by budget airlines, in which fares are unbundled and ancillary fees—such as charges for checked baggage—are introduced to create new revenue channels and personalize services. Legacy carriers are increasingly following this example, helping them attract frequent travelers by tailoring service packages around specific consumer wants and travel habits. Meanwhile, the planning cycles of airlines have shifted to emphasize immediate operational changes and investments that bolster market appeal in the short term while still preparing for longer-term fleet expansion and recurring orders. This dual focus aims to boost profitability and operational resilience.
\n\n
To manage costs and adapt quickly, many airlines, like American Airlines, are also exploring artificial intelligence tools to enhance service personalization and drive efficiency savings, leveraging AI to automate decision-making and reduce expenses. As a result, the industry's momentum is now shaped by a combination of rapid responses to changing market conditions and broader strategic shifts that position airlines to compete in both current and future markets.
\n\n
\n
Sam Moshiashvili: During the pandemic, airlines reduced their capacity, resulting in fixed airport costs being spread over fewer flights. This led to higher fees and ultimately increased freight rates for shippers and logistics providers. As passenger travel recovered, growing e-commerce and demand for faster delivery kept air cargo volumes and revenues elevated, encouraging airlines to add more international flights to support logistics and shipping needs.
\n\n
At the same time, disruptions along key trade routes, including those near the Red Sea, made ocean transport less reliable, prompting many companies to hold extra inventory and lean on air freight more heavily to keep supply chains moving. Higher competition and adjusted supply chains led to lower freight rates and reduced profit, even while capacity and export activity picked up again.
\n\n
In the first and second quarters of 2025, tariff uncertainty has led many businesses to accelerate their purchases, only to slow down later, resulting in a stop-start pattern in bookings and air cargo activity. Large integrators, such as UPS, are experiencing softer volumes in the third quarter of 2025 on some previously high-growth corridors, including the China–US lanes. Higher tariffs and the loss of duty-free thresholds also reduced shipment counts, compelling carriers to scale back their flights.
\n\n
Thi Le: Fluctuations in flight capacity and airfare significantly influence hotel and motel performance in the US. When airlines expand capacity, visitor arrivals and hotel occupancy tend to rise; when they cut routes or raise prices, travel demand and bookings decline. Hotels must adjust their capacity and pricing strategies accordingly to remain competitive. Broader economic shifts shape this cycle, as softened travel demand prompts airlines to reduce flights and lower fares to rekindle travel activity.
\n\n
The impact of airfare changes varies across hotel segments: midscale and budget hotels benefit most because their price-sensitive guests respond strongly to more affordable travel options, while motels, catering mainly to road travelers, remain largely unaffected, as their target customers are primarily road-trippers. Upscale properties experience minimal influence from airfare fluctuations.
\n\n
When facing constrained air travel and elevated costs, major hotel chains such as Hilton, Marriott, Hyatt and IHG are prioritizing cost control and regional markets over price increases. Many focus on promotions, loyalty programs and attracting drive-market guests to maintain occupancy, especially during midweek periods.
\n\n
\n
SL: Airline consumers are facing heightened ticket costs, primarily because of surcharges related to volatile aviation fuel prices, which businesses use to protect their profitability against changing input costs. In the US, airlines often integrate these surcharges into the overall ticket price rather than listing them as separate fees, effectively raising fares as necessary without explicit disclosure to travelers.
\n\n
Airports, on the other hand, absorb the impact of rising operational costs differently. As publicly managed entities, especially in the US, airports face strict regulations that limit their ability to increase charges in response to infrastructure upgrades or maintenance needs. This leaves them susceptible to higher operating expenses, often resulting in growing debt burdens, with Airports Council International reporting that 2023 debt-to-EBITDA ratios were above pre-pandemic figures.
\n\n
Federal support can alleviate some financial pressure, but it typically covers only a portion of the costs, leaving many airports vulnerable to ongoing fiscal challenges driven by increasing operational expenses.
\n\n
SM: Geopolitical disruptions, such as conflicts in Ukraine and the Middle East, combined with aging carrier fleets, have contributed to higher fuel costs for airlines. Airspace closures in conflict zones force extended flight routes and increased fuel consumption. Many of these higher costs are passed to shipping and logistics companies through fuel surcharges and revised contracts.
\n\n
Although global oil prices eased in late 2024, helping jet fuel prices decline, logistics businesses adjusted their own surcharges accordingly throughout the year, even as North American capacity continued to expand. Elevated fuel and operating costs have also prompted airlines to raise the rates of their capacity purchase agreements with logistics providers. Meanwhile, increased compensation expenses and higher wages paid to union employees have contributed to rising operating costs, which limit profit growth among logistics establishments and create ongoing pressure to balance service levels with cost control.
\n\n
![\"\"](\"https://content.ibisworld.com/media/bl3fel0x/shutterstock_2617803245.jpg?rmode=max&width=720\")
\n
TL: Rising jet fuel prices are driving up airfares. In response, many price-sensitive travelers are opting for shorter, drive-to trips to control travel expenses. This shift has increased demand for roadside hotels, budget motels and midscale properties in regional markets.
\n\n
Although higher transportation costs persist, domestic leisure travel remains relatively steady as travelers adapt by taking shorter trips or choosing nearby destinations. Smaller markets along major highways and affordable lodging options are benefiting from this trend.
\n\n
The US hotels market is expected to experience slower demand from international travelers, characterized by rising price sensitivity and flat demand resulting from higher airfares. In response, hotel groups are expanding midscale and economy brands through property conversions that emphasize affordability, cleanliness and convenience, thereby reinforcing a two-speed recovery between the budget and luxury segments.
\n\n
\n
SL: Consumer travel preferences are shifting, and airlines and airports are adapting to these trends. While traditional tourist destinations in Europe continue to attract stable interest, demand for travel to the US has either plateaued or declined, including among US residents who are now seeking trips abroad.
\n\n
The Asia-Pacific region, especially locations such as Japan and South Korea, has gained significant popularity as both a tourist destination and a travel hub, with UN Tourism statistics finding that international tourism to these countries in H1 2025 rose 21.0% and 15.0% YOY respectively. These countries have captured attention through their strong cultural appeal and distinctive attractions.
\n\n
At the same time, comparatively weaker local currencies have made travel to these destinations more affordable for middle- and upper-income travelers. The result isn’t a reduction in global demand, but a noticeable shift in where travelers want to go, prompting airlines to refocus their routes and marketing efforts on the most sought-after regions as they respond to evolving consumer preferences.
\n\n
![\"\"](\"https://content.ibisworld.com/media/aefdppdw/shutterstock_651615691.jpg?rmode=max&width=720\")
\n
SM: Uneven international recovery has forced logistics companies to navigate corridor-specific tightness and cost volatility. Strong demand, particularly for e-commerce and electronics products, led to limited air capacity. Meanwhile, geopolitical disruptions redirected shipping from ocean to air, further tightening capacity and helping to drive rates higher.
\n\n
Revenue ton-miles across US airlines declined for several years until belly-hold capacity on passenger aircraft began increasing again in 2024. Operations adapted to changing trade patterns, with dedicated international air gateways in Alaska and Miami facilitating global trade. Business-to-consumer volumes and revenue increased as e-commerce and demand from small to medium-sized businesses remained strong.
\n\n
However, business-to-business volume declined because of stagnant manufacturing activity, reflecting the uneven nature of international recovery across different segments of the logistics market. This forced providers to continuously adjust their capacity and service offerings to match shifting demand patterns across key trade corridors.
\n\n
TL: Tighter immigration enforcement, visa uncertainty and reports of tourist detentions have led to a decline in international travel to the US, particularly from China and Canada. Economic pressures, tariffs and geopolitical tensions have discouraged inbound visits. Besides, a strong US dollar has made US destinations more expensive for foreigners while spurring more Americans to travel abroad, putting pressure on internationally dependent hotels.
\n\n
Major gateway cities, such as New York and San Francisco, that rely heavily on overseas travelers, experience slower demand among uneven international air traffic and weaker global demand. Conversely, domestic and drive-to destinations have remained strong, supported by steady local, regional and weekend travel.
\n\n
Hotel groups such as Marriott, Hilton, Hyatt and IHG report robust demand for select‑service and midscale brands that cater to domestic and regional travelers. Suburban corporate travel and short leisure stays are driving growth for Courtyard, Fairfield, Hampton and Home2 Suites, while luxury urban hotels are lagging behind.
\n\n
Overall, US hotel trends are defined by strong regional travel, a firm domestic base and continued weakness in international segments.
\n\n
\n
SL: Aviation competition has shifted in recent years as airlines focus less on broad global expansion and more on building capacity in strategic regions where demand is strongest. Rather than relying solely on increased international travel to drive growth, businesses like United and American Airlines now prioritize launching new routes to key markets such as Bangkok and major European cities.
\n\n
These expansions enable airlines to enter high-value regions more frequently while responding to less robust inbound travel to the US, capitalizing on evolving passenger traffic patterns. By targeting value-add routes and optimizing networks around regional preferences, carriers position themselves for a competitive advantage despite shifting demand.
\n\n
This approach bolsters their market share, supports profitability and creates new commercial opportunities, as airlines compete through more specialized regional offerings rather than generic global growth strategies.
\n\n
SM: Despite lower air product volumes in some markets, air cargo revenue ton miles initially increased because of e-commerce growth. However, the end of duty-free import thresholds and more competitive ground shipping rates have reversed some of these gains. 2025 tariff-related disruptions reduced shipments to the US.
\n\n
At the same time, reduced airline capacity intensified competition by narrowing pricing power. Low utilization rates also compelled carriers to increase the cost per shipment. Even with fewer inbound volumes and tariff uncertainty, global market resilience continues to support growth in regions outside the US.
\n\n
Expanding manufacturing activity worldwide could drive business-to-business volume growth and intensify competition throughout 2025. This dynamic environment requires logistics providers to strike a balance between investing in capacity and maintaining competitive pricing.
\n\n
Navigating regulatory changes and shifting trade patterns could create both challenges and opportunities across different geographic markets and customer segments.
\n\n
TL: The rise of budget airlines, increased connectivity and new routes directly impact US hotels and motels. These changes are leading to an increased demand for accommodation services, which vary across different demographic and geographic segments, thereby directly increasing competition.
\n\n
Budget airlines have increased the demand for affordable lodging, while more business travel has boosted competition for high-end hotels. Greater international connectivity is also leading hotels and motels to tailor their services for a diverse range of international travelers.
\n\n
Seasonal fluctuations linked to promotion-driven bookings pose a challenge to hotels and airlines’ partnerships, which can also influence industry competition. Changing traveler preferences for a seamless experience dictate that hotels must adapt or risk losing market share.
\n\n
![\"\"](\"https://content.ibisworld.com/media/cs5kqmiz/shutterstock_2441452589.jpg?rmode=max&width=720&height=480\")
\n
Major hotel chains will need to focus on specific tactics, such as loyalty programs and targeted offers, to maximize opportunities from diversified inbound travelers and to contend with challenges like heavy discounting pressure.
\n\n
Across all hotel chains, increased air traffic is enhancing occupancy potential; however, revenue growth also depends on strategic partnerships with carriers and targeted offers for budget airline passengers.
\n\n
\n
SL: New aircraft models, such as the A321XLR, are poised to reshape global aviation capacity with advanced fuel efficiency, adjustable wing spans and premium cabin features, including fully reclining seating that appeals to business travelers. These innovations give airlines better options for expanding long-range flights and attracting high-value customers, which can drive growth for both carriers and airports through regular and profitable routes.
\n\n
However, ongoing manufacturing delays—such as the setback announced by Boeing for the 777x in October 2025—will force some airlines, including Emirates, to continue operating older jets rather than showcasing new premium classes. This reliance on legacy fleets increases maintenance costs and limits immediate enhancements in passenger comfort and operational efficiency. Airports may experience steady flight activity, especially as travelers opt for more connecting flights because of aircraft shortages, which can boost spending at terminal facilities on food and retail.
\n\n
Ultimately, while new aircraft will eventually broaden the industry's appeal, delivery delays mean that airlines and airports must balance aspirational growth with risk management and sustained use of older planes for the coming year.
\n\n
![\"\"](\"https://content.ibisworld.com/media/3sygeedh/shutterstock_1714189924.jpg?rmode=max&width=720&height=480\")
\n
SM: Capacity growth will depend on freighter availability and tariff-related disruptions to the supply chain. Major carriers have reduced trans-Pacific capacity to offset the impacts of tariffs, while facing weak business-to-business demand despite growth in intra-Asia lanes.
\n\n
Global cargo capacity continued to strengthen overall, though North American capacity declined. As a result, US logistics companies may face lower freight volumes and increased operational costs, which could lead to lower profit and market consolidation. A significant portion of the world's wide-body freighters are now past their optimal service life. Next-generation aircraft are unlikely to arrive until at least 2027 or 2028, so this could exacerbate the capacity shortage.
\n\n
Rising aircraft ownership and leasing costs add further pressure since these non-fuel headwinds keep airline operating costs elevated. Older, less efficient aircraft may force airlines to expand fuel surcharges and capacity purchase agreement costs, placing pressure on logistics providers. However, companies may benefit if forecasts for moderating oil prices and reduced jet fuel consumption prove accurate, offering some relief from cost pressures in the near term.
\n\n
TL: An increase in global aviation capacity could significantly influence the US tourism sector, presenting both opportunities and risks. More seats and routes drive higher occupancy in major cities and airport markets, while flight reductions quickly depress demand in connection-dependent areas.
\n\n
Opportunities include greater tourism inflows, higher revenue potential, expansion possibilities and a more diverse clientele that encourages service innovation. However, risks arise from intensified competition, fluctuating demand, dependence on international travel, operational challenges in serving diverse guests and environmental or infrastructure strains.
\n\n
Major hotel groups are adapting to these shifts through focused strategies. For instance, Marriott is expanding luxury and lifestyle brands near key airports and conventions; Hilton leverages its diverse portfolio and loyalty programs to capture varying traveler segments; Hyatt emphasizes lifestyle and luxury growth to attract premium international and group travelers; IHG balances demand using its midscale and extended-stay brands to offset aviation volatility; Accor aligns luxury and lifestyle hotels with transatlantic and event-driven demand; and Sheraton, within Marriott, enhances renovated properties to attract group and business travel as global air connectivity rebounds.
","TimeToRead":12,"FinalWord":null,"KeyTakeaways":null,"DatePublished":"2025-11-25T00:00:00Z","DatePublishedTimestamp":0,"DateFormatted":"November 25, 2025","UrlSlug":"/us-airlines-roundtable/","SeoTitle":"Roundtable: How Aviation Pressures Are Reshaping Demand Across Industries","SeoDescription":"Global air travel is in flux, and the effects reach far beyond the runway. IBISWorld analysts break down how shifting capacity and costs influence key sectors.","SeoImageUrl":"/media/cozh5p0k/socialmedia-logo.png","Tags":["Aviation","Logistics","Supply Chain","Hotels","Tourism","Efficiency","competition","Aircraft Manufacturing","Shipping","Tariff","Geopolitics"],"Sectors":null,"Toc":null,"Culture":"en","IsFeatured":false,"IsHidden":false},"Item2": {"Id":7938,"Key":"698cfa46-f28f-438e-a8c2-d89b77561fde","Title":"Roundtable: How Aviation Pressures Are Reshaping Demand Across Industries","Country":"United States","CountryId":1,"AuthorId":1205,"AuthorName":"IBISWorld","AuthorTitle":"Industry research you can trust","AuthorPhoto":"/media/cozh5p0k/socialmedia-logo.png","AuthorBio":"IBISWorld is the world's largest independent publisher of industry reports.","Image":null,"CategoryId":1126,"CategoryName":"Analyst Insights","Persona":null,"Content":"Air travel is reshaping everything from shipping lanes to hotel lobbies, with fluctuating capacity, shifting demand patterns and rising operating costs filtering through the broader economy. Whether through surcharges embedded in airfares, the rerouting of global logistics networks or the ebb and flow of international visitor volumes, aviation dynamics now influence planning and performance across multiple sectors. To unpack how these forces are playing out, three IBISWorld analysts share their perspectives on the industrywide ripple effects:
\nTogether, their insights reveal how global aviation trends are reshaping competition, demand and strategic risks across interconnected markets.
\n\n
\n
Seth Lee: The aviation industry is navigating a period of demand recovery by maintaining a sizable fleet and adopting pricing models commonly used by budget airlines, in which fares are unbundled and ancillary fees—such as charges for checked baggage—are introduced to create new revenue channels and personalize services. Legacy carriers are increasingly following this example, helping them attract frequent travelers by tailoring service packages around specific consumer wants and travel habits. Meanwhile, the planning cycles of airlines have shifted to emphasize immediate operational changes and investments that bolster market appeal in the short term while still preparing for longer-term fleet expansion and recurring orders. This dual focus aims to boost profitability and operational resilience.
\n\n
To manage costs and adapt quickly, many airlines, like American Airlines, are also exploring artificial intelligence tools to enhance service personalization and drive efficiency savings, leveraging AI to automate decision-making and reduce expenses. As a result, the industry's momentum is now shaped by a combination of rapid responses to changing market conditions and broader strategic shifts that position airlines to compete in both current and future markets.
\n\n
\n
Sam Moshiashvili: During the pandemic, airlines reduced their capacity, resulting in fixed airport costs being spread over fewer flights. This led to higher fees and ultimately increased freight rates for shippers and logistics providers. As passenger travel recovered, growing e-commerce and demand for faster delivery kept air cargo volumes and revenues elevated, encouraging airlines to add more international flights to support logistics and shipping needs.
\n\n
At the same time, disruptions along key trade routes, including those near the Red Sea, made ocean transport less reliable, prompting many companies to hold extra inventory and lean on air freight more heavily to keep supply chains moving. Higher competition and adjusted supply chains led to lower freight rates and reduced profit, even while capacity and export activity picked up again.
\n\n
In the first and second quarters of 2025, tariff uncertainty has led many businesses to accelerate their purchases, only to slow down later, resulting in a stop-start pattern in bookings and air cargo activity. Large integrators, such as UPS, are experiencing softer volumes in the third quarter of 2025 on some previously high-growth corridors, including the China–US lanes. Higher tariffs and the loss of duty-free thresholds also reduced shipment counts, compelling carriers to scale back their flights.
\n\n
Thi Le: Fluctuations in flight capacity and airfare significantly influence hotel and motel performance in the US. When airlines expand capacity, visitor arrivals and hotel occupancy tend to rise; when they cut routes or raise prices, travel demand and bookings decline. Hotels must adjust their capacity and pricing strategies accordingly to remain competitive. Broader economic shifts shape this cycle, as softened travel demand prompts airlines to reduce flights and lower fares to rekindle travel activity.
\n\n
The impact of airfare changes varies across hotel segments: midscale and budget hotels benefit most because their price-sensitive guests respond strongly to more affordable travel options, while motels, catering mainly to road travelers, remain largely unaffected, as their target customers are primarily road-trippers. Upscale properties experience minimal influence from airfare fluctuations.
\n\n
When facing constrained air travel and elevated costs, major hotel chains such as Hilton, Marriott, Hyatt and IHG are prioritizing cost control and regional markets over price increases. Many focus on promotions, loyalty programs and attracting drive-market guests to maintain occupancy, especially during midweek periods.
\n\n
\n
SL: Airline consumers are facing heightened ticket costs, primarily because of surcharges related to volatile aviation fuel prices, which businesses use to protect their profitability against changing input costs. In the US, airlines often integrate these surcharges into the overall ticket price rather than listing them as separate fees, effectively raising fares as necessary without explicit disclosure to travelers.
\n\n
Airports, on the other hand, absorb the impact of rising operational costs differently. As publicly managed entities, especially in the US, airports face strict regulations that limit their ability to increase charges in response to infrastructure upgrades or maintenance needs. This leaves them susceptible to higher operating expenses, often resulting in growing debt burdens, with Airports Council International reporting that 2023 debt-to-EBITDA ratios were above pre-pandemic figures.
\n\n
Federal support can alleviate some financial pressure, but it typically covers only a portion of the costs, leaving many airports vulnerable to ongoing fiscal challenges driven by increasing operational expenses.
\n\n
SM: Geopolitical disruptions, such as conflicts in Ukraine and the Middle East, combined with aging carrier fleets, have contributed to higher fuel costs for airlines. Airspace closures in conflict zones force extended flight routes and increased fuel consumption. Many of these higher costs are passed to shipping and logistics companies through fuel surcharges and revised contracts.
\n\n
Although global oil prices eased in late 2024, helping jet fuel prices decline, logistics businesses adjusted their own surcharges accordingly throughout the year, even as North American capacity continued to expand. Elevated fuel and operating costs have also prompted airlines to raise the rates of their capacity purchase agreements with logistics providers. Meanwhile, increased compensation expenses and higher wages paid to union employees have contributed to rising operating costs, which limit profit growth among logistics establishments and create ongoing pressure to balance service levels with cost control.
\n\n
\n
TL: Rising jet fuel prices are driving up airfares. In response, many price-sensitive travelers are opting for shorter, drive-to trips to control travel expenses. This shift has increased demand for roadside hotels, budget motels and midscale properties in regional markets.
\n\n
Although higher transportation costs persist, domestic leisure travel remains relatively steady as travelers adapt by taking shorter trips or choosing nearby destinations. Smaller markets along major highways and affordable lodging options are benefiting from this trend.
\n\n
The US hotels market is expected to experience slower demand from international travelers, characterized by rising price sensitivity and flat demand resulting from higher airfares. In response, hotel groups are expanding midscale and economy brands through property conversions that emphasize affordability, cleanliness and convenience, thereby reinforcing a two-speed recovery between the budget and luxury segments.
\n\n
\n
SL: Consumer travel preferences are shifting, and airlines and airports are adapting to these trends. While traditional tourist destinations in Europe continue to attract stable interest, demand for travel to the US has either plateaued or declined, including among US residents who are now seeking trips abroad.
\n\n
The Asia-Pacific region, especially locations such as Japan and South Korea, has gained significant popularity as both a tourist destination and a travel hub, with UN Tourism statistics finding that international tourism to these countries in H1 2025 rose 21.0% and 15.0% YOY respectively. These countries have captured attention through their strong cultural appeal and distinctive attractions.
\n\n
At the same time, comparatively weaker local currencies have made travel to these destinations more affordable for middle- and upper-income travelers. The result isn’t a reduction in global demand, but a noticeable shift in where travelers want to go, prompting airlines to refocus their routes and marketing efforts on the most sought-after regions as they respond to evolving consumer preferences.
\n\n
\n
SM: Uneven international recovery has forced logistics companies to navigate corridor-specific tightness and cost volatility. Strong demand, particularly for e-commerce and electronics products, led to limited air capacity. Meanwhile, geopolitical disruptions redirected shipping from ocean to air, further tightening capacity and helping to drive rates higher.
\n\n
Revenue ton-miles across US airlines declined for several years until belly-hold capacity on passenger aircraft began increasing again in 2024. Operations adapted to changing trade patterns, with dedicated international air gateways in Alaska and Miami facilitating global trade. Business-to-consumer volumes and revenue increased as e-commerce and demand from small to medium-sized businesses remained strong.
\n\n
However, business-to-business volume declined because of stagnant manufacturing activity, reflecting the uneven nature of international recovery across different segments of the logistics market. This forced providers to continuously adjust their capacity and service offerings to match shifting demand patterns across key trade corridors.
\n\n
TL: Tighter immigration enforcement, visa uncertainty and reports of tourist detentions have led to a decline in international travel to the US, particularly from China and Canada. Economic pressures, tariffs and geopolitical tensions have discouraged inbound visits. Besides, a strong US dollar has made US destinations more expensive for foreigners while spurring more Americans to travel abroad, putting pressure on internationally dependent hotels.
\n\n
Major gateway cities, such as New York and San Francisco, that rely heavily on overseas travelers, experience slower demand among uneven international air traffic and weaker global demand. Conversely, domestic and drive-to destinations have remained strong, supported by steady local, regional and weekend travel.
\n\n
Hotel groups such as Marriott, Hilton, Hyatt and IHG report robust demand for select‑service and midscale brands that cater to domestic and regional travelers. Suburban corporate travel and short leisure stays are driving growth for Courtyard, Fairfield, Hampton and Home2 Suites, while luxury urban hotels are lagging behind.
\n\n
Overall, US hotel trends are defined by strong regional travel, a firm domestic base and continued weakness in international segments.
\n\n
\n
SL: Aviation competition has shifted in recent years as airlines focus less on broad global expansion and more on building capacity in strategic regions where demand is strongest. Rather than relying solely on increased international travel to drive growth, businesses like United and American Airlines now prioritize launching new routes to key markets such as Bangkok and major European cities.
\n\n
These expansions enable airlines to enter high-value regions more frequently while responding to less robust inbound travel to the US, capitalizing on evolving passenger traffic patterns. By targeting value-add routes and optimizing networks around regional preferences, carriers position themselves for a competitive advantage despite shifting demand.
\n\n
This approach bolsters their market share, supports profitability and creates new commercial opportunities, as airlines compete through more specialized regional offerings rather than generic global growth strategies.
\n\n
SM: Despite lower air product volumes in some markets, air cargo revenue ton miles initially increased because of e-commerce growth. However, the end of duty-free import thresholds and more competitive ground shipping rates have reversed some of these gains. 2025 tariff-related disruptions reduced shipments to the US.
\n\n
At the same time, reduced airline capacity intensified competition by narrowing pricing power. Low utilization rates also compelled carriers to increase the cost per shipment. Even with fewer inbound volumes and tariff uncertainty, global market resilience continues to support growth in regions outside the US.
\n\n
Expanding manufacturing activity worldwide could drive business-to-business volume growth and intensify competition throughout 2025. This dynamic environment requires logistics providers to strike a balance between investing in capacity and maintaining competitive pricing.
\n\n
Navigating regulatory changes and shifting trade patterns could create both challenges and opportunities across different geographic markets and customer segments.
\n\n
TL: The rise of budget airlines, increased connectivity and new routes directly impact US hotels and motels. These changes are leading to an increased demand for accommodation services, which vary across different demographic and geographic segments, thereby directly increasing competition.
\n\n
Budget airlines have increased the demand for affordable lodging, while more business travel has boosted competition for high-end hotels. Greater international connectivity is also leading hotels and motels to tailor their services for a diverse range of international travelers.
\n\n
Seasonal fluctuations linked to promotion-driven bookings pose a challenge to hotels and airlines’ partnerships, which can also influence industry competition. Changing traveler preferences for a seamless experience dictate that hotels must adapt or risk losing market share.
\n\n
\n
Major hotel chains will need to focus on specific tactics, such as loyalty programs and targeted offers, to maximize opportunities from diversified inbound travelers and to contend with challenges like heavy discounting pressure.
\n\n
Across all hotel chains, increased air traffic is enhancing occupancy potential; however, revenue growth also depends on strategic partnerships with carriers and targeted offers for budget airline passengers.
\n\n
\n
SL: New aircraft models, such as the A321XLR, are poised to reshape global aviation capacity with advanced fuel efficiency, adjustable wing spans and premium cabin features, including fully reclining seating that appeals to business travelers. These innovations give airlines better options for expanding long-range flights and attracting high-value customers, which can drive growth for both carriers and airports through regular and profitable routes.
\n\n
However, ongoing manufacturing delays—such as the setback announced by Boeing for the 777x in October 2025—will force some airlines, including Emirates, to continue operating older jets rather than showcasing new premium classes. This reliance on legacy fleets increases maintenance costs and limits immediate enhancements in passenger comfort and operational efficiency. Airports may experience steady flight activity, especially as travelers opt for more connecting flights because of aircraft shortages, which can boost spending at terminal facilities on food and retail.
\n\n
Ultimately, while new aircraft will eventually broaden the industry's appeal, delivery delays mean that airlines and airports must balance aspirational growth with risk management and sustained use of older planes for the coming year.
\n\n
\n
SM: Capacity growth will depend on freighter availability and tariff-related disruptions to the supply chain. Major carriers have reduced trans-Pacific capacity to offset the impacts of tariffs, while facing weak business-to-business demand despite growth in intra-Asia lanes.
\n\n
Global cargo capacity continued to strengthen overall, though North American capacity declined. As a result, US logistics companies may face lower freight volumes and increased operational costs, which could lead to lower profit and market consolidation. A significant portion of the world's wide-body freighters are now past their optimal service life. Next-generation aircraft are unlikely to arrive until at least 2027 or 2028, so this could exacerbate the capacity shortage.
\n\n
Rising aircraft ownership and leasing costs add further pressure since these non-fuel headwinds keep airline operating costs elevated. Older, less efficient aircraft may force airlines to expand fuel surcharges and capacity purchase agreement costs, placing pressure on logistics providers. However, companies may benefit if forecasts for moderating oil prices and reduced jet fuel consumption prove accurate, offering some relief from cost pressures in the near term.
\n\n
TL: An increase in global aviation capacity could significantly influence the US tourism sector, presenting both opportunities and risks. More seats and routes drive higher occupancy in major cities and airport markets, while flight reductions quickly depress demand in connection-dependent areas.
\n\n
Opportunities include greater tourism inflows, higher revenue potential, expansion possibilities and a more diverse clientele that encourages service innovation. However, risks arise from intensified competition, fluctuating demand, dependence on international travel, operational challenges in serving diverse guests and environmental or infrastructure strains.
\n\n
Major hotel groups are adapting to these shifts through focused strategies. For instance, Marriott is expanding luxury and lifestyle brands near key airports and conventions; Hilton leverages its diverse portfolio and loyalty programs to capture varying traveler segments; Hyatt emphasizes lifestyle and luxury growth to attract premium international and group travelers; IHG balances demand using its midscale and extended-stay brands to offset aviation volatility; Accor aligns luxury and lifestyle hotels with transatlantic and event-driven demand; and Sheraton, within Marriott, enhances renovated properties to attract group and business travel as global air connectivity rebounds.
","TimeToRead":12,"FinalWord":null,"KeyTakeaways":null,"DatePublished":"2025-11-25T00:00:00Z","DatePublishedTimestamp":0,"DateFormatted":"November 25, 2025","UrlSlug":"/us-airlines-roundtable/","SeoTitle":"Roundtable: How Aviation Pressures Are Reshaping Demand Across Industries","SeoDescription":"Global air travel is in flux, and the effects reach far beyond the runway. IBISWorld analysts break down how shifting capacity and costs influence key sectors.","SeoImageUrl":"/media/cozh5p0k/socialmedia-logo.png","Tags":["Aviation","Logistics","Supply Chain","Hotels","Tourism","Efficiency","competition","Aircraft Manufacturing","Shipping","Tariff","Geopolitics"],"Sectors":null,"Toc":null,"Culture":"en","IsFeatured":false,"IsHidden":false},"Item3": {"Id":7938,"Key":"698cfa46-f28f-438e-a8c2-d89b77561fde","Title":"Roundtable: How Aviation Pressures Are Reshaping Demand Across Industries","Country":"United States","CountryId":1,"AuthorId":1205,"AuthorName":"IBISWorld","AuthorTitle":"Industry research you can trust","AuthorPhoto":"/media/cozh5p0k/socialmedia-logo.png","AuthorBio":"IBISWorld is the world's largest independent publisher of industry reports.","Image":null,"CategoryId":1126,"CategoryName":"Analyst Insights","Persona":null,"Content":"Air travel is reshaping everything from shipping lanes to hotel lobbies, with fluctuating capacity, shifting demand patterns and rising operating costs filtering through the broader economy. Whether through surcharges embedded in airfares, the rerouting of global logistics networks or the ebb and flow of international visitor volumes, aviation dynamics now influence planning and performance across multiple sectors. To unpack how these forces are playing out, three IBISWorld analysts share their perspectives on the industrywide ripple effects:
\nTogether, their insights reveal how global aviation trends are reshaping competition, demand and strategic risks across interconnected markets.
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Seth Lee: The aviation industry is navigating a period of demand recovery by maintaining a sizable fleet and adopting pricing models commonly used by budget airlines, in which fares are unbundled and ancillary fees—such as charges for checked baggage—are introduced to create new revenue channels and personalize services. Legacy carriers are increasingly following this example, helping them attract frequent travelers by tailoring service packages around specific consumer wants and travel habits. Meanwhile, the planning cycles of airlines have shifted to emphasize immediate operational changes and investments that bolster market appeal in the short term while still preparing for longer-term fleet expansion and recurring orders. This dual focus aims to boost profitability and operational resilience.
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To manage costs and adapt quickly, many airlines, like American Airlines, are also exploring artificial intelligence tools to enhance service personalization and drive efficiency savings, leveraging AI to automate decision-making and reduce expenses. As a result, the industry's momentum is now shaped by a combination of rapid responses to changing market conditions and broader strategic shifts that position airlines to compete in both current and future markets.
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Sam Moshiashvili: During the pandemic, airlines reduced their capacity, resulting in fixed airport costs being spread over fewer flights. This led to higher fees and ultimately increased freight rates for shippers and logistics providers. As passenger travel recovered, growing e-commerce and demand for faster delivery kept air cargo volumes and revenues elevated, encouraging airlines to add more international flights to support logistics and shipping needs.
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At the same time, disruptions along key trade routes, including those near the Red Sea, made ocean transport less reliable, prompting many companies to hold extra inventory and lean on air freight more heavily to keep supply chains moving. Higher competition and adjusted supply chains led to lower freight rates and reduced profit, even while capacity and export activity picked up again.
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In the first and second quarters of 2025, tariff uncertainty has led many businesses to accelerate their purchases, only to slow down later, resulting in a stop-start pattern in bookings and air cargo activity. Large integrators, such as UPS, are experiencing softer volumes in the third quarter of 2025 on some previously high-growth corridors, including the China–US lanes. Higher tariffs and the loss of duty-free thresholds also reduced shipment counts, compelling carriers to scale back their flights.
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Thi Le: Fluctuations in flight capacity and airfare significantly influence hotel and motel performance in the US. When airlines expand capacity, visitor arrivals and hotel occupancy tend to rise; when they cut routes or raise prices, travel demand and bookings decline. Hotels must adjust their capacity and pricing strategies accordingly to remain competitive. Broader economic shifts shape this cycle, as softened travel demand prompts airlines to reduce flights and lower fares to rekindle travel activity.
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The impact of airfare changes varies across hotel segments: midscale and budget hotels benefit most because their price-sensitive guests respond strongly to more affordable travel options, while motels, catering mainly to road travelers, remain largely unaffected, as their target customers are primarily road-trippers. Upscale properties experience minimal influence from airfare fluctuations.
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When facing constrained air travel and elevated costs, major hotel chains such as Hilton, Marriott, Hyatt and IHG are prioritizing cost control and regional markets over price increases. Many focus on promotions, loyalty programs and attracting drive-market guests to maintain occupancy, especially during midweek periods.
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SL: Airline consumers are facing heightened ticket costs, primarily because of surcharges related to volatile aviation fuel prices, which businesses use to protect their profitability against changing input costs. In the US, airlines often integrate these surcharges into the overall ticket price rather than listing them as separate fees, effectively raising fares as necessary without explicit disclosure to travelers.
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Airports, on the other hand, absorb the impact of rising operational costs differently. As publicly managed entities, especially in the US, airports face strict regulations that limit their ability to increase charges in response to infrastructure upgrades or maintenance needs. This leaves them susceptible to higher operating expenses, often resulting in growing debt burdens, with Airports Council International reporting that 2023 debt-to-EBITDA ratios were above pre-pandemic figures.
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Federal support can alleviate some financial pressure, but it typically covers only a portion of the costs, leaving many airports vulnerable to ongoing fiscal challenges driven by increasing operational expenses.
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SM: Geopolitical disruptions, such as conflicts in Ukraine and the Middle East, combined with aging carrier fleets, have contributed to higher fuel costs for airlines. Airspace closures in conflict zones force extended flight routes and increased fuel consumption. Many of these higher costs are passed to shipping and logistics companies through fuel surcharges and revised contracts.
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Although global oil prices eased in late 2024, helping jet fuel prices decline, logistics businesses adjusted their own surcharges accordingly throughout the year, even as North American capacity continued to expand. Elevated fuel and operating costs have also prompted airlines to raise the rates of their capacity purchase agreements with logistics providers. Meanwhile, increased compensation expenses and higher wages paid to union employees have contributed to rising operating costs, which limit profit growth among logistics establishments and create ongoing pressure to balance service levels with cost control.
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TL: Rising jet fuel prices are driving up airfares. In response, many price-sensitive travelers are opting for shorter, drive-to trips to control travel expenses. This shift has increased demand for roadside hotels, budget motels and midscale properties in regional markets.
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Although higher transportation costs persist, domestic leisure travel remains relatively steady as travelers adapt by taking shorter trips or choosing nearby destinations. Smaller markets along major highways and affordable lodging options are benefiting from this trend.
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The US hotels market is expected to experience slower demand from international travelers, characterized by rising price sensitivity and flat demand resulting from higher airfares. In response, hotel groups are expanding midscale and economy brands through property conversions that emphasize affordability, cleanliness and convenience, thereby reinforcing a two-speed recovery between the budget and luxury segments.
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SL: Consumer travel preferences are shifting, and airlines and airports are adapting to these trends. While traditional tourist destinations in Europe continue to attract stable interest, demand for travel to the US has either plateaued or declined, including among US residents who are now seeking trips abroad.
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The Asia-Pacific region, especially locations such as Japan and South Korea, has gained significant popularity as both a tourist destination and a travel hub, with UN Tourism statistics finding that international tourism to these countries in H1 2025 rose 21.0% and 15.0% YOY respectively. These countries have captured attention through their strong cultural appeal and distinctive attractions.
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At the same time, comparatively weaker local currencies have made travel to these destinations more affordable for middle- and upper-income travelers. The result isn’t a reduction in global demand, but a noticeable shift in where travelers want to go, prompting airlines to refocus their routes and marketing efforts on the most sought-after regions as they respond to evolving consumer preferences.
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SM: Uneven international recovery has forced logistics companies to navigate corridor-specific tightness and cost volatility. Strong demand, particularly for e-commerce and electronics products, led to limited air capacity. Meanwhile, geopolitical disruptions redirected shipping from ocean to air, further tightening capacity and helping to drive rates higher.
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Revenue ton-miles across US airlines declined for several years until belly-hold capacity on passenger aircraft began increasing again in 2024. Operations adapted to changing trade patterns, with dedicated international air gateways in Alaska and Miami facilitating global trade. Business-to-consumer volumes and revenue increased as e-commerce and demand from small to medium-sized businesses remained strong.
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However, business-to-business volume declined because of stagnant manufacturing activity, reflecting the uneven nature of international recovery across different segments of the logistics market. This forced providers to continuously adjust their capacity and service offerings to match shifting demand patterns across key trade corridors.
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TL: Tighter immigration enforcement, visa uncertainty and reports of tourist detentions have led to a decline in international travel to the US, particularly from China and Canada. Economic pressures, tariffs and geopolitical tensions have discouraged inbound visits. Besides, a strong US dollar has made US destinations more expensive for foreigners while spurring more Americans to travel abroad, putting pressure on internationally dependent hotels.
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Major gateway cities, such as New York and San Francisco, that rely heavily on overseas travelers, experience slower demand among uneven international air traffic and weaker global demand. Conversely, domestic and drive-to destinations have remained strong, supported by steady local, regional and weekend travel.
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Hotel groups such as Marriott, Hilton, Hyatt and IHG report robust demand for select‑service and midscale brands that cater to domestic and regional travelers. Suburban corporate travel and short leisure stays are driving growth for Courtyard, Fairfield, Hampton and Home2 Suites, while luxury urban hotels are lagging behind.
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Overall, US hotel trends are defined by strong regional travel, a firm domestic base and continued weakness in international segments.
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SL: Aviation competition has shifted in recent years as airlines focus less on broad global expansion and more on building capacity in strategic regions where demand is strongest. Rather than relying solely on increased international travel to drive growth, businesses like United and American Airlines now prioritize launching new routes to key markets such as Bangkok and major European cities.
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These expansions enable airlines to enter high-value regions more frequently while responding to less robust inbound travel to the US, capitalizing on evolving passenger traffic patterns. By targeting value-add routes and optimizing networks around regional preferences, carriers position themselves for a competitive advantage despite shifting demand.
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This approach bolsters their market share, supports profitability and creates new commercial opportunities, as airlines compete through more specialized regional offerings rather than generic global growth strategies.
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SM: Despite lower air product volumes in some markets, air cargo revenue ton miles initially increased because of e-commerce growth. However, the end of duty-free import thresholds and more competitive ground shipping rates have reversed some of these gains. 2025 tariff-related disruptions reduced shipments to the US.
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At the same time, reduced airline capacity intensified competition by narrowing pricing power. Low utilization rates also compelled carriers to increase the cost per shipment. Even with fewer inbound volumes and tariff uncertainty, global market resilience continues to support growth in regions outside the US.
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Expanding manufacturing activity worldwide could drive business-to-business volume growth and intensify competition throughout 2025. This dynamic environment requires logistics providers to strike a balance between investing in capacity and maintaining competitive pricing.
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Navigating regulatory changes and shifting trade patterns could create both challenges and opportunities across different geographic markets and customer segments.
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TL: The rise of budget airlines, increased connectivity and new routes directly impact US hotels and motels. These changes are leading to an increased demand for accommodation services, which vary across different demographic and geographic segments, thereby directly increasing competition.
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Budget airlines have increased the demand for affordable lodging, while more business travel has boosted competition for high-end hotels. Greater international connectivity is also leading hotels and motels to tailor their services for a diverse range of international travelers.
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Seasonal fluctuations linked to promotion-driven bookings pose a challenge to hotels and airlines’ partnerships, which can also influence industry competition. Changing traveler preferences for a seamless experience dictate that hotels must adapt or risk losing market share.
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Major hotel chains will need to focus on specific tactics, such as loyalty programs and targeted offers, to maximize opportunities from diversified inbound travelers and to contend with challenges like heavy discounting pressure.
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Across all hotel chains, increased air traffic is enhancing occupancy potential; however, revenue growth also depends on strategic partnerships with carriers and targeted offers for budget airline passengers.
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SL: New aircraft models, such as the A321XLR, are poised to reshape global aviation capacity with advanced fuel efficiency, adjustable wing spans and premium cabin features, including fully reclining seating that appeals to business travelers. These innovations give airlines better options for expanding long-range flights and attracting high-value customers, which can drive growth for both carriers and airports through regular and profitable routes.
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However, ongoing manufacturing delays—such as the setback announced by Boeing for the 777x in October 2025—will force some airlines, including Emirates, to continue operating older jets rather than showcasing new premium classes. This reliance on legacy fleets increases maintenance costs and limits immediate enhancements in passenger comfort and operational efficiency. Airports may experience steady flight activity, especially as travelers opt for more connecting flights because of aircraft shortages, which can boost spending at terminal facilities on food and retail.
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Ultimately, while new aircraft will eventually broaden the industry's appeal, delivery delays mean that airlines and airports must balance aspirational growth with risk management and sustained use of older planes for the coming year.
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SM: Capacity growth will depend on freighter availability and tariff-related disruptions to the supply chain. Major carriers have reduced trans-Pacific capacity to offset the impacts of tariffs, while facing weak business-to-business demand despite growth in intra-Asia lanes.
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Global cargo capacity continued to strengthen overall, though North American capacity declined. As a result, US logistics companies may face lower freight volumes and increased operational costs, which could lead to lower profit and market consolidation. A significant portion of the world's wide-body freighters are now past their optimal service life. Next-generation aircraft are unlikely to arrive until at least 2027 or 2028, so this could exacerbate the capacity shortage.
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Rising aircraft ownership and leasing costs add further pressure since these non-fuel headwinds keep airline operating costs elevated. Older, less efficient aircraft may force airlines to expand fuel surcharges and capacity purchase agreement costs, placing pressure on logistics providers. However, companies may benefit if forecasts for moderating oil prices and reduced jet fuel consumption prove accurate, offering some relief from cost pressures in the near term.
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TL: An increase in global aviation capacity could significantly influence the US tourism sector, presenting both opportunities and risks. More seats and routes drive higher occupancy in major cities and airport markets, while flight reductions quickly depress demand in connection-dependent areas.
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Opportunities include greater tourism inflows, higher revenue potential, expansion possibilities and a more diverse clientele that encourages service innovation. However, risks arise from intensified competition, fluctuating demand, dependence on international travel, operational challenges in serving diverse guests and environmental or infrastructure strains.
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Major hotel groups are adapting to these shifts through focused strategies. For instance, Marriott is expanding luxury and lifestyle brands near key airports and conventions; Hilton leverages its diverse portfolio and loyalty programs to capture varying traveler segments; Hyatt emphasizes lifestyle and luxury growth to attract premium international and group travelers; IHG balances demand using its midscale and extended-stay brands to offset aviation volatility; Accor aligns luxury and lifestyle hotels with transatlantic and event-driven demand; and Sheraton, within Marriott, enhances renovated properties to attract group and business travel as global air connectivity rebounds.
","TimeToRead":12,"FinalWord":null,"KeyTakeaways":null,"DatePublished":"2025-11-25T00:00:00Z","DatePublishedTimestamp":0,"DateFormatted":"November 25, 2025","UrlSlug":"/us-airlines-roundtable/","SeoTitle":"Roundtable: How Aviation Pressures Are Reshaping Demand Across Industries","SeoDescription":"Global air travel is in flux, and the effects reach far beyond the runway. IBISWorld analysts break down how shifting capacity and costs influence key sectors.","SeoImageUrl":"/media/cozh5p0k/socialmedia-logo.png","Tags":["Aviation","Logistics","Supply Chain","Hotels","Tourism","Efficiency","competition","Aircraft Manufacturing","Shipping","Tariff","Geopolitics"],"Sectors":null,"Toc":null,"Culture":"en","IsFeatured":false,"IsHidden":false}}}