European airlines are expected to report first-quarter results soon, providing an update on the upcoming peak travel season. There are growing concerns that economic uncertainty could slow demand and affect airline profits.
Europeans plan to travel less on the continent this summer, with Generation Z planning to travel significantly less, according to a study released by the European Travel Commission on Wednesday.
For European airlines, the main risk is a drop in demand and revenue per seat, Royal Bank of Canada analyst Ruairi Cullinane said. However, lower fuel prices could bring some benefits.
This is the first sign that the travel industry may slow down after the industry saw strong growth after the end of the COVID-19 pandemic. For much of the airline industry, this period marks a strong recovery in profitability.
Economic instability, caused in part by U.S. President Donald Trump’s trade policies, has raised concerns about a recession in Europe. Analysts worry that such economic challenges could reduce consumer and tourism spending.
While the possibility of a drop in demand exists, analysts point out that bookings have not yet seen a significant drop.
While no clear negative impact has been seen yet, one survey found that around 10% fewer Gen Z travelers planned to travel between April and September 2025 compared with the previous year. These travelers are particularly sensitive to rising costs.
Eduardo Santander, CEO of the European Travel Commission, explained that Gen Z has been more cautious in recent years in terms of travel plans and has taken fewer trips than older generations. He also noted that leisure travel across Europe has fallen slightly, with more people choosing to attend specific events.
Overall, Europeans are planning 3% fewer trips during this period, with leisure travel down 8% compared with 2024.
Ryanair warned that airfare increases this summer may be modest and the airline may struggle to make up for last year’s losses. Meanwhile, Air France-KLM said it may cut economy fares to boost transatlantic travel.
Interest in traveling to the United States has fallen since Trump took office due to concerns about political risks and potential challenges with immigration.
A senior European airline industry figure said international demand has fallen since Trump implemented sweeping tariffs in early April, with some passengers delaying bookings until political uncertainty is resolved.
Despite these concerns, analysts are not too worried about airline performance at the moment. Stephen Furlong, equity research analyst at David Securities, said airlines are slowing capacity growth and demand remains strong enough to maintain reasonable airfares.
However, Goodbody Research analyst Dudley Shanley noted that investors are closely watching the potential impact of weak North American ticket sales, which could affect the European market.
Changes in demand due to weather and climate change
Extreme weather and rising temperatures are also affecting travel patterns, with interest in southern Mediterranean destinations down 8% from last year. However, Italy and Spain remain popular destinations for European tourists.
Research shows that 28% of European tourists now prefer to travel to areas with milder climates to avoid extreme heat. Tourist interest in northern, central and eastern Europe is increasing year on year.
The study recommends that tourism companies in warmer climates should focus on indoor activities during the hottest hours of the day and adjust their marketing strategies to cope with the impacts of climate change and promote tourism in milder seasons.
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