What’s Ahead for the Airline Industry in 2025?

A Spirit Airlines Airbus A320 and a United Airlines Airbus A319 arrive at LaGuardia Airport in New York City on Jan. 9, 2024. Spirit’s successful business model inspired other companies, including United Airlines. Charly Triballeau/AFP via Getty Images

The skies look clear for the airline industry for the new year: The Boeing strike is over, traveling demand is robust, airlines are well prepared to monetize their assets, and the incoming Washington administration could pave the way for consolidations.

The airline industry has experienced the best and the worst times in the soon-to-be-ended current year. The best times were due to the acceleration of the post-COVID-19 demand recovery for traveling, with bookings hitting a record during the year.

The worst time was when a midair door panel blew off the new Boeing 737 MAX, tarnishing the iconic manufacturer’s image.

Then, Boeing machinists had a multi-week strike, adding to the industry’s woes.

In addition, there were IT failures during the peak summer season, which stranded travelers worldwide and cost airlines hundreds of millions of dollars.

The best time was the end of this year when travel hit records and airlines booked hefty profits.

Investors have zeroed in on airline stocks, which are soaring and outpacing the broader market year-to-date. At the forefront are United Airlines shares, up 143 percent; Delta, up 55 percent; and American Airlines, up 27 percent; compared with 26 percent of the S&P 500.

The situation could improve further in 2025 for several reasons. One of them is that the Boeing strike is over, and the iconic aircraft manufacturer is working to fix its quality problems. It’s bringing back production in-house (insourcing) by acquiring critical suppliers, such as Spirit AeroSystems, which it sold in 2005.

Wall Street is beginning to warm up again to the iconic company, with its shares up by close to 18 percent in the past month.

Another factor is that the U.S. economy remains strong thanks to robust consumer spending, including spending on traveling, which is expected to reach as much as $1.22 trillion by 2027.

A third factor is airliners’ efforts to better monetize their assets, such as broadening seat choices by creating new classes of seats such as “premium” and “premium select” with a higher price tag.

“Airlines, including the traditional low-cost carriers, are likely to continue to expand their premium offerings, as travelers show no signs of relenting on their demand for higher-end experiences,” Julian Kheel, CEO and founder of Tripsight Inc., told The Epoch Times via email.

Joe Cronin, president of International Citizens Insurance, sees the increase in demand for premium travel as a critical driver behind this trend.

“Mid-tier airlines like United are already innovating with upgraded amenities and domestic business-class offerings,” he told The Epoch Times via email. “Different luxury experiences will likely be developed by amending the designs of airplane cabins or the standards of inflight service. The emphasis on premium products may create tougher competition for high-end customers, further stimulating carriers to upgrade their services.”

Aiding airliners’ efforts to monetize their assets is the diffusion of artificial intelligence (AI).

“AI is going to play a leading role for change in 2025, including within the airline industry,” Brittany Betts, director of PR and marketing for the luxury travel brand The 100 Collection, told The Epoch Times in an email. “We will start to see huge efficiency changes in the airline industry as AI gets integrated into air-traffic control systems, baggage management technology, and understanding how best to design and optimize the interior of a plane.”

Still, there’s a fourth factor: deregulation. The incoming Trump administration could be lenient on M&A, fostering consolidation in the industry.

“With the return of a Republican administration, airlines that fell on hard times in 2024 may make new attempts at merging with competitors in the hopes that new leadership at federal agencies will look more favorably on the agreements,” Kheel said.

Cronin believes the industry is already ripe for the unfolding of this trend.

“The latest bankruptcy of Spirit Airlines and the buyout of Alaska Air by Hawaiian Airlines signal a trend toward greater consolidation in the airline industry,” he said. “This suggests that the smaller and weak airlines will continue to struggle, while larger airlines are expected to pursue mergers or acquisitions to enhance their market presence.”

Meanwhile, Cronin said that being operationally and technologically up to date will become a priority for the industry.

“The IT systems failure that cost Delta a lot in 2024 exposed massive vulnerabilities in its outdated digital systems. Airlines need to upgrade their frameworks to allow for proper operations throughout busy hours,” he said. “Undoubtedly, automation and AI technologies will be among the necessary investments. From a traveler’s perspective, the need for protection from trip interruptions in the event of delays and system failures becomes apparent; comprehensive travel insurance is necessary to cover these costs.”