Record travel demand expected in 2025 as consumers prioritize experiences

The insight: The number of passengers taking to the skies is expected to surpass 5 billion for the first time in 2025, per the International Air Transport Association (IATA). That’s both a sign that demand has fully recovered following the pandemic and an indication that consumers continue to prioritize travel and experiences despite economic uncertainty.

• A record 5.2 billion people are expected to fly in 2025, a 6.7% increase YoY.
• That surge in demand is boosting airlines, with global revenues for the industry forecast to grow 4.4% YoY to a record $1.01 trillion.

Zoom in: US travel demand is particularly strong: Passenger volumes are at record highs this year, up 17% compared with 2022, according to the TSA.

Consumers are particularly keen to travel during the holidays.

• The TSA screened over 3 million passengers on the Sunday after Thanksgiving, breaking a record set less than five months ago on July 7.
• Half of US consumers (49%) plan to travel between Thanksgiving and mid-January, per Deloitte’s 2024 travel survey. At the same time, the average number of intended trips rose from 1.88 last year to 2.14 this year—largely driven by an increase in travel intent among Gen Z and high-income consumers.
• Average trip length is also on the rise, thanks to bigger budgets, increased demand for international trips, and the growing popularity of “laptop lugging” from travelers looking to combine work and pleasure.

Behind the numbers: Higher-income travelers are driving the majority of travel spending—leading companies like United, Delta, and Hyatt to expand their premium offerings.

• Hyatt plans to open over 50 luxury and lifestyle hotels globally by 2026. The company has doubled its luxury room count since 2017, with 70% of its hotel rooms now categorized as luxury or “upper upscale.”
• Delta is reconfiguring its planes to increase premium seating and adding perks like upgraded lounges and Shake Shack burgers to enhance its appeal to frequent flyers. The airline expects premium seats to account for the majority of its ticket sales by 2027.
• Alaska Airlines plans to add as many as 12 overseas routes to popular destinations in Asia and Europe and increase the percentage of premium seats in its fleet to 29%, up from 26% today.
• Even Southwest Airlines, long known for its egalitarian approach to seating, will soon implement a premium option for customers willing to pay more for extra legroom.

Looking ahead: It’s not just premium brands that are seeing clear skies ahead. Southwest, JetBlue, and American Airlines all raised their Q4 outlooks because of healthy bookings and higher ticket prices.

• Both Southwest and JetBlue—along with United—are seeing a recovery in domestic demand, although that’s partly due to less competition from low-budget carriers that have been forced to trim their routes to cut costs.
• Rising consumer confidence and the return of business trips will provide additional tailwinds for the travel industry in 2025.

Go further: Check out our Travel 2024 Infopack.

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