Aviation Analysts Sees Trump Tariffs as a Long-Term Threat to Demand

Key Takeaways

• President Trump's tariff policies "will negatively impact commercial aviation," an industry analyst said.
• Visual Approach Analytics reported that international travelers to the U.S. have declined by 10% in total.
• Delta "will defer any deliveries that have a tariff," CEO Ed Bastian said Wednesday.

A leading aviation analyst believes that the Trump administration’s tariff policies could “destruct demand” for air travel. 

Visual Approach Analytics stated Thursday that the White House’s “deep move toward deglobalization” will negatively impact commercial aircraft, which was built to connect the world. The firm said that demand has already started to soften. International travelers to the U.S. are down by 25% from Canada and Mexico and an estimated 10% globally. “We believe that the threat to aviation lies in demand destruction. A long-term impact is largely dependent on economic scenarios,” said the firm.

Visual Approach stated that this could be beneficial to U.S. carriers in the short-term, as they have a relative advantage at the point of sale. Delta Air Lines (DAL), according to a transcript from AlphaSense, stated on its first quarter earnings call that it had seen strong summer bookings.

Delta 'Will Defer Any Deliveries That Have a Tariff'

The analyst stated that the growth rate is likely to decline in the longer term. VAA stated that with tariffs in effect, aircraft made for American airlines outside the U.S. “are likely to be parked,” adding that “the incentives for U.S. Airlines are to stall for some time until the uncertainty is resolved.” Delta CEO Ed Bastian announced on the earnings conference call that the airline no longer sees itself growing this year.

Delta shares fell 11% during recent trading. Shares of rivals American Airlines, United Airlines, and Southwest Airlines also dropped 13%, 12% and 10% respectively.