US travel bookings faced a notable slump in May 2025, as both business and leisure air travel demand experienced a sharp decline. According to a comprehensive report released by the Airlines Reporting Corporation (ARC), there was a staggering thirteen percent drop in tickets issued through traditional travel agencies. This decline was chiefly driven by an eight percent decrease in corporate travel bookings and a five percent fall in leisure bookings. These shifts underscore significant changes in traveler behavior, heightened cost-consciousness among consumers, and the rising prominence of online booking platforms.
Despite the overall number of passenger trips remaining relatively stable at approximately 25.8 million, the pronounced downturn in agency-driven bookings signals a deeper transformation in how Americans plan and purchase their flights. More companies are opting to curtail business travel, while vacationers are increasingly seeking more economical and flexible self-service options. This evolving landscape is placing immense pressure on the traditional agency model just as the summer travel season approaches.
Booking Trends Reveal Sharp Declines in Traditional Channels
In May 2025, U.S.-based travel agencies processed 25.76 million passenger trips, only slightly up from the 25.67 million trips recorded in May 2024. However, this apparent stability in trip volume masks troubling underlying issues. Bookings issued through corporate travel agencies fell by 8 percent, while leisure-focused agencies observed a 5 percent decline. This downturn highlights a significant pullback in both work-related travel and vacation trips managed through traditional in-person booking channels.
Conversely, online travel agencies (OTAs) enjoyed an 8 percent increase in bookings year-over-year, indicating a steady shift toward self-managed, digital-first travel planning. Travelers are increasingly comfortable managing their itineraries through online platforms and mobile apps, particularly in a price-sensitive market. This trend illustrates a pivotal shift in consumer preferences and behaviors, with technology playing a crucial role in reshaping the travel industry.
Corporate Travel Suffers Most Amid Business Caution
Corporate air travel is currently grappling with significant challenges. Despite earlier predictions that 2025 would herald a full return to office-based operations and enhanced business mobility, corporate travel has not rebounded as anticipated. ARC’s data indicates that business-focused agencies have experienced the steepest decline among all booking channels, with an 8 percent drop compared to the previous year. Companies are carefully assessing the return-on-investment associated with in-person meetings, prompting many to stick with virtual alternatives as they navigate tighter budgets.
This sustained decline in corporate travel poses a considerable threat to airlines that depend heavily on higher-margin business-class bookings and flexible, last-minute ticket sales. As businesses become more cautious, the dynamics of corporate travel are shifting, emphasizing the need for airlines to adapt their offerings and pricing strategies.
Leisure Travel Softens Despite Stable Passenger Volume
Leisure travel also exhibited signs of weakness in May. Although many Americans continue to fly, leisure agency bookings dropped by 5 percent compared to May 2024. This decline can be attributed to economic caution among households, rising living costs, and a growing inclination toward booking directly or through OTAs to secure better deals. Despite this downturn in agency bookings, total domestic trips remained stable at 16.17 million, reflecting a mere 0.12 percent decrease year-over-year. Meanwhile, international trips saw a slight uptick to 9.59 million, marking a 0.90 percent increase from the previous year, which suggests that long-haul leisure demand remains relatively robust.
Revenue Declines Despite Flat Passenger Numbers
While the volume of travelers remained steady, ticket sales revenue experienced a significant decline. Total sales processed through ARC reached $8.58 billion in May 2025, representing a 4.94 percent decrease from the $9.03 billion reported in May 2024. This revenue drop becomes even more pronounced when analyzed by category. Domestic airfare revenue fell from $3.31 billion to $3.21 billion, reflecting a 2.98 percent decrease. In contrast, international airfare revenue plummeted from $3.68 billion to $3.35 billion, a staggering 9.10 percent decline, which is the largest drop across all tracked categories. Overall, total fare revenue, combining both markets, declined by 6.20 percent to $6.56 billion. These figures suggest that while travelers are still flying, they are opting for more economical choices, such as budget routes, discount carriers, or limited-service fares.
Average Ticket Prices Continue to Slide
The average ticket price across all cabin classes settled at $530, down 2 percent compared to May 2024. Within this spectrum, economy class tickets averaged $462, experiencing a 2 percent month-over-month drop but showing a 1 percent increase year-over-year. On the other hand, premium class fares reached $1,201, indicating a 2 percent monthly dip but a 2 percent rise from May 2024. These trends indicate that airlines are adopting more aggressive pricing strategies, especially in premium classes, likely as a means to stimulate demand and compete with the increasing presence of international routes and OTA discounting.
Cash Transactions Climb as Credit Sales Shrink
In a notable twist, ARC’s report highlighted an intriguing payment trend. While credit card-based ticket sales decreased slightly by 0.65 percent, cash ticket sales surged by 9.31 percent year-over-year, totaling 2.56 million trips. This surge in cash transactions could reflect increased utilization of consolidators, budget travelers opting for cash payments through agencies, or group bookings managed outside traditional channels.
NDC Adoption Continues to Grow
Another significant development outlined in the report is the continued growth of New Distribution Capability (NDC) usage. In May 2025, 21.5 percent of all transactions were NDC-enabled, up from 20.3 percent in May 2024. A total of 948 travel agencies reported NDC transactions, showcasing ongoing airline investments in modernizing ticket sales and packaging processes. This shift is empowering customers with greater control over ancillary services and pricing, which aligns with the broader trend of travelers seeking more personalized and flexible travel experiences.
The Big Picture: A Market in Transition
The data from May 2025 paints a complex picture of a resilient yet evolving U.S. air travel market. Travelers are still flying, but their methods of booking, the amounts they pay, and the entities they rely on for travel planning are undergoing rapid transformations. Traditional travel agencies are witnessing a clear drop in activity—especially within the corporate travel sector—while online platforms are steadily capturing a larger market share.
As airlines navigate a multifaceted environment characterized by changing consumer habits, pricing competition, and technological advancements, the urgency to adapt has never been greater. Travel agencies, particularly those focused on corporate and leisure markets, must pivot or diversify their strategies to keep pace with the new landscape of travel booking. The upcoming summer season will serve as a critical testing ground for these industry players as they strive to meet the demands and expectations of today’s savvy travelers.
