By: Don Driggers

Air Canada has cut its 2025 earnings forecast as it faces a steep decline in bookings to the United States, a trend that’s already rippling into New York City’s vital tourism economy, according to the New York Post.

In a sharp move flagged Friday, the Montreal-based airline reported a “low teens” percentage drop in bookings for U.S.-bound flights over the next six months, a trend largely tied to escalating diplomatic tensions and increasingly hostile rhetoric from President Trump.

The New York Post was first to report the shift and its potentially massive implications for cities like New York. During the first quarter alone, Air Canada saw a 4.6% drop in passenger revenue for Canada-U.S. routes, with traffic down a staggering 7%. The New York Post noted this troubling dip as part of a broader pattern of Canadians pulling back from spending their money in the U.S.—whether through canceled trips or avoided goods.

Trump’s trade policies, suggested tariffs, and even offhand remarks—like his recent suggestion that Canada should become America’s “51st state”—are souring relations with our northern neighbor. The New York Post highlighted Trump’s “never say never” quip during his meeting with newly elected Canadian Prime Minister Mark Carney as an inflection point in the downturn.

The fallout is hitting New York hard. As reported by the New York Post, NYC’s tourism office has downgraded its full-year visitor forecast from 67.6 million to 64.1 million. The loss of Canadian visitors—traditionally one of the city’s most reliable international demographics—accounts for over half of the decline in overseas travelers.

According to the New York Post, a March report from Air Canada showed a 10% drop in year-over-year bookings from Canada to the U.S. for the April through September period. The city had expected a full recovery in travel post-pandemic, but international tourism has now taken a substantial hit.

Tourism-related businesses in New York are already feeling the pinch. The New York Post reported that the Empire State Building Observatory saw attendance fall nearly 5% in the first quarter. Tour bus operators told the New York Post they’ve seen foreign ridership plunge by up to 25%, prompting many to pivot toward more budget-friendly offerings.

As New Yorkers know all too well, international tourists are big spenders—staying longer and shelling out more than domestic travelers. The New York Post cited figures showing visitors spent $51 billion in NYC last year, half of which came from foreigners. That figure is projected to fall by $4 billion in 2025.

Even airports are showing strain. According to the New York Post, the Port Authority logged roughly 117,000 fewer foreign arrivals year-over-year so far.

To cushion the blow, Air Canada raised ticket prices and revised its earnings outlook. Per the New York Post, the airline now projects full-year EBITDA between $2.3 billion and $2.6 billion—down from a previous high-end forecast of $2.75 billion.

CEO Michael Rousseau acknowledged to analysts that “uncertainty” dominated the first quarter and emphasized that political tensions and exchange rate volatility are undermining transborder demand. The New York Post emphasized Rousseau’s warning that bookings for U.S. flights remain weak across the board.

Despite these headwinds, Air Canada’s shares actually rose over 10% after reporting smaller-than-expected Q1 losses. Still, analysts caution that ongoing volatility and weakening demand may continue to drag down future performance.