Airfares between Europe and the United States have tumbled to levels not seen since before the pandemic, fueled by a confluence of geopolitical jitters, currency fluctuations, and evolving traveler preferences on both sides of the Atlantic. As Western European visitors scale back U.S. trips and American bargain hunters capitalize on low fares, airlines and industry analysts warn that 2025 may prove one of the most challenging years yet for profitability on transatlantic routes.

Western Europe Retracts as Eastern Europe Grows

In May, overseas arrivals to the United States dipped by 2.8 percent compared with the same month last year, driven primarily by a 4.4 percent decline in travelers from Western Europe. By contrast, visits from Eastern Europe rose by 4.6 percent over the same period. While northern and southern European holidaymakers—long the backbone of U.S. inbound tourism—have begun reconsidering trips amid political turbulence and heightened visa scrutiny, business travel from major financial centers such as London and Frankfurt has also softened.

Early‑summer booking data reinforce the downturn: inbound reservations for July are down 13 percent year‑on‑year, suggesting the slump will extend through peak travel season. Cirium reports that average round‑trip economy fares on over 50 U.S.‑Europe city pairs fell 7 percent in the first quarter, with routes such as Atlanta‑London seeing steep declines—down 55 percent from last year. Mobile‑booking app Hopper calculates that average round‑trip fares now stand at approximately $817, roughly on par with summer 2019 prices.

Geopolitical Friction and Border Measures

A series of high‑profile incidents has weighed on Europeans’ appetite for U.S. travel. Former President Trump’s flirtation with annexing Greenland, abrupt tariff escalations, and stricter visa‑waiver policies have stoked uncertainty among potential tourists. Even though current administration policies differ, the residual chill has lingered. Business executives report that C‑suite and middle‑management visitors are deferring meetings or opting for virtual conferences, while leisure travelers cite concerns about potential border delays and evolving health protocols.

Airline executives also point to increased screening and new customs‑processing requirements at major U.S. hubs, which have lengthened layovers and dampened route attractiveness. Frankfurt‑New York flights, for instance, now feature additional preclearance checkpoints that extend total travel time by up to two hours. This friction has prompted some carriers to shift capacity toward intra‑European routes or emerging markets in Southeast Asia and Latin America.

A resilient U.S. dollar has amplified the downturn in European outbound travel. With the euro and pound trading roughly 10 percent below their peak summer 2023 levels, the cost of accommodation, dining, and local transport in the U.S. has risen substantially for Western visitors. Hotels in New York City, which commanded average nightly rates near $350 a room in 2022, now advertise rates closer to $300—but after currency conversion and taxes, the effective cost remains elevated for eurozone travelers.

Conversely, American travelers enjoy an unprecedented purchasing advantage when visiting Europe. The dollar’s strength against the euro and sterling has encouraged late‑booking behavior, with U.S. tourists waiting for last‑minute deals before committing to summer itineraries. This bargain‑hunting trend has driven down yield for airlines, as cabin fill rates rely increasingly on discount bookings rather than stable, advance‑purchase fares.

Supply Dynamics and Load Factors

Despite lowering fares, airlines continue to deploy substantial capacity on transatlantic routes. As of mid‑May, US airports scheduled 4.3 percent more international departures for the summer season compared with 2024. Carriers such as United and Delta report that while seats filled by European travelers have declined, American outbound demand has risen enough to partially offset the slump. Delta notes that roughly 80 percent of its long‑haul traffic originates in the U.S., and those passengers are currently paying fares “significantly higher” than elsewhere.

Nevertheless, the imbalance creates challenges for route profitability. Transatlantic flights traditionally relied on premium‑cabin revenue from business travelers; with boardroom traffic down, airlines must fill seats with lower‑margin economy passengers. Tourism Economics warns that without a rebound in high‑yield corporate travel, 2025 will be a “tough year” for carriers seeking to break even on these long‑haul sectors. Some airlines are recalibrating by reducing frequencies on less profitable city pairs while boosting offerings on routes with stronger leisure appeal—such as New York‑Barcelona and Miami‑Lisbon.

Airline Strategies to Stimulate Demand

In response to the slump, major carriers are deploying targeted promotions and adjusting network strategies. Air France‑KLM announced price cuts and enhanced loyalty‑program incentives for U.S. departures, aiming to retain leisure travelers. Lufthansa intends to market transatlantic services more aggressively to Americans, highlighting new business‑class products and bundled holiday packages that include rail connections to other European cities. American Airlines, confident in the U.S. market’s strength, has added premium‑economy seating on select European routes and launched a “Euro Escape” campaign offering weekend‑trip deals from major hubs.

Such efforts come amid broader attempts to diversify revenue streams. Airlines are expanding ancillary offerings—such as paid seat selection, on‑board Wi‑Fi bundles, and co‑branded credit‑card partnerships—to offset lower base fares. United has renegotiated catering contracts to introduce premium snack boxes and regionally themed menus that can be sold separately, while Delta is experimenting with dynamic baggage‑fee pricing based on load factors and time‑to‑departure.

Fleet and Alliance Adjustments

Fleet deployment reflects the changing demand mix. Many carriers are positioning mid‑range widebodies—such as Airbus A330neos and Boeing 787s—on transatlantic routes, optimizing capacity for mixed leisure and business markets. In contrast, larger four‑engine jets and premium‑heavy configurations have been redeployed to Asia or South America, where corporate booking patterns remain robust. Alliance partnerships, including those among Star Alliance, SkyTeam, and oneworld, are sharing capacity more flexibly, offering seamless codeshares and joint fare products to attract both European and North American travelers.

Airlines are also eyeing point‑to‑point models over traditional hub‑and‑spoke operations to unlock direct connections between secondary cities. Low‑cost long‑haul entrants such as Norse Atlantic are planning to add routes like Berlin‑Boston and Rome‑Chicago, targeting cost‑sensitive leisure segments that prioritize nonstop service. Legacy carriers, in turn, have responded by launching seasonal flights from regional European airports such as Edinburgh and Prague to U.S. leisure destinations, often in partnership with tour operators.

Looking Toward Recovery

While the current slump shows few signs of an immediate turnaround, industry observers remain cautiously optimistic about a recovery in the latter half of 2025. Large corporate events—such as global trade fairs in Frankfurt and investor summits in New York—scheduled for autumn are expected to revive business travel. Currency forecasts also anticipate modest euro and pound appreciation as European Central Bank rate decisions diverge from Federal Reserve policy, which could temper the dollar’s appeal.

Airlines are banking on these developments to restore transatlantic yields. “We’re monitoring both macroeconomic indicators and event calendars to align our capacity slate,” says an executive at a major U.S. carrier. “Our hope is that a combination of stronger corporate bookings, milder currency headwinds, and refreshed marketing will gradually lift fares back toward sustainable levels.”

In the meantime, travelers on both continents continue to benefit from one of the most competitive transatlantic airfare environments in years, even as airlines navigate the challenges of balancing load factors, fare structures, and network strategies to weather the slump.

(Adapted from BusinessPost.ie)