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“People aren’t eager to make vacation plans or spend their hard-earned money when things feel uncertain,” American Airlines CEO Robert Isom said during Thursday’s quarterly earnings call.That growing sense of hesitation is leaving airlines with more seats than they can sell—once again. Delta, Southwest, and United Airlines all announced they are scaling back their planned capacity increases, even as they remain hopeful for a strong summer travel season.This month, Delta, Southwest, Alaska Airlines, and American Airlines all withdrew their 2025 financial forecasts, citing the unpredictable nature of the U.S. economy. United Airlines took a different approach, offering two potential financial outlooks—one assuming a recession and one without—while maintaining it expects to stay profitable either way.For travelers, that’s translating into lower fares. According to the latest Bureau of Labor Statistics data, airfare dropped 5.3% in March compared to the same time last year. While Easter fell in March last year, potentially affecting the comparison, prices also declined by 4% in February, suggesting a broader trend.Another headwind for the industry is sluggish corporate travel recovery. Airline executives say business travel—historically a key revenue source—is still lagging as companies, like households, contend with economic uncertainty. Government travel has also taken a hit amid the Trump administration’s aggressive cost-cutting measures and widespread federal layoffs this year.“When uncertainty arises, business trips are often the first to be cut,” said Conor Cunningham, a travel analyst at Melius Research.Delta CEO Ed Bastian noted in early April that business travel was up 10% compared to the start of 2024, but that momentum has since stalled.Business travelers are particularly valuable to airlines, as they’re less likely to shop around for cheaper fares and often book close to departure—when prices are typically highest.With too many seats and not enough demand, airlines are cutting prices to fill planes.Alaska Airlines warned this week that lower-than-expected demand will likely impact its second-quarter profits. CFO Shane Tackett told CNBC that while demand hasn’t collapsed, the airline has had to reduce fares to fill its cabins.“Ticket prices just aren’t as strong as they were in late 2024 and early this year,” Tackett said. “There’s still solid demand across the industry—it’s just not hitting the peak levels we hoped would carry over from last year.”On the premium side of air travel, demand remains relatively stable. And Americans are still booking international trips in large numbers.Still, the broader uncertainty continues to cast a shadow over the sector.“Once there’s a clearer outlook, the economy will bounce back—and likely do so quickly,” Isom added.