The US airline industry is experiencing mixed trends during the upcoming Thanksgiving holiday in 2025. According to the aviation market intelligence firm IBA, airline capacity within North America has increased by 2.0% year-on-year, led primarily by a 2.8% rise from full-service carriers. Despite this capacity growth, airline profitability continues to decline, highlighting ongoing financial pressures across the sector.
IBA’s data indicates that scheduled capacity on US domestic flights and services within North America constitute nearly 90% of total scheduled seats, with the remaining capacity supplied by international flights. The market remains dominated by the Big Four US airlines, which together control about two-thirds of scheduled seats. Low-cost carriers account for a marginal 0.5% capacity increase, signifying their relatively stable position.
In financial terms, profitability has notably weakened, with low-cost carriers posting a negative operating margin of -2.3% over the past 12 months, down from -1.3%. Full-service airlines saw a slight decline from 7.1% to 7.0%, influenced by rising costs and softer revenues. Recent third-quarter results reveal divergent challenges; full-service airlines have experienced a 0.4% decrease in unit revenue, while low-cost carriers face a 0.3% increase in unit costs, driven by increased staffing and maintenance expenses.
Disruptions caused by the recent US government shutdown, which temporarily hampered air traffic control staffing, impacted airline schedules. However, with the FAA now back to normal operations, airlines are entering the holiday travel window with greater operational stability. Nonetheless, ongoing financial headwinds remain a concern for the sector.
Dan Taylor, IBA’s head of consulting, commented, "While travelers enjoy their holiday feast, airlines face a more complex picture with rising costs and declining profits. The industry will need to navigate these challenges carefully in the coming months."
