U.S. Travel Industry Warns of Multi-Billion Dollar Losses: After Record 2025 Shutdown, New Funding Standoff Pressures Air Traffic Again
Federal budget debates in Washington often sound like a distant political battle, but the consequences quickly spill over to passengers, companies, and the entire chain of activities that depends on safe and fluid air traffic. Leading associations from the travel and hospitality sector say that the experience from the fall of 2025 showed how quickly a political funding decision turns into real disruptions at airports, in hotel bookings, and in business plans. At the heart of the warnings are two messages: federal government shutdowns generate large direct and indirect costs in the short term, and in the long term, they undermine confidence in travel reliability and infrastructure stability. Therefore, the industry argues, political gridlock must not be resolved only when security and operational problems appear on the ground.
Warnings were updated in early February 2026 because, according to a report by Business Travel News, federal government funding expired on January 31, 2026, triggering a new shutdown, only about two and a half months after the previous one ended. This time gap further intensifies nervousness in the sector: when a crisis repeats in a short period, travel and business event organizers find it harder to assess risk, and travelers more often postpone plans. The industry recalls that the 2025 shutdown ended on November 12, but that the consequences did not vanish on the same day. Even after a political agreement, the system needs time to "catch the rhythm," and the market needs time to regain a sense of predictability.
What the 2025 Shutdown Analysis Showed: 43 Days, $6.1 Billion, and a Travel Decline Measurable Day by Day
The most concrete overview of the consequences was provided by the U.S. Travel Association in cooperation with Tourism Economics, in an analysis of the effects of the 43-day federal government shutdown that lasted from October 1 to November 12, 2025. According to that document, the total economic loss related to travel and connected sectors was estimated at 6.1 billion U.S. dollars, including direct, indirect, and induced effects on the broader economy. The average daily loss was estimated at $136.8 million. Direct losses in travel spending were estimated at $2.7 billion, described in the analysis as equivalent to an approximately 1.7% reduction in total U.S. travel spending during the shutdown period. In the industry, this figure is used as an argument that the damage is not just an "inconvenience," but a statistically visible decline in economic activity.
The analysis breaks down the effects through multiple channels. The first is a sharp drop in official government travel and government-related business travel, including travel by employees and contractors. Second are disruptions in air traffic that included cancellations and delays, but also a period of mandatory flight reductions at the busiest airports. Third are closures or reduced services at federally managed attractions, such as national parks and Smithsonian museums, which the report cites as a factor that reduced interest and attendance. Fourth is the broader effect of uncertainty, where some travelers and companies delay planning and bookings because they cannot assess whether the trip will proceed without major disruptions. The authors of the report state that "tail" effects after the end of the shutdown are also included in the calculations, precisely because of the stagnation in planning and booking during the crisis.
In figures, U.S. Travel and Tourism Economics estimate that the shutdown reduced the daily number of trips on average by more than 88,000. Summed over the period, it is estimated that there were about 3,801,908 lost trips (trip-related losses), with an additional 5,484,912 passenger "instances" related to flight delays. Together, this makes 9,286,821 episodes where passengers either completely gave up on travel or were exposed to delays and cancellations with a measurable economic impact. The authors emphasize that the estimates are based on multiple data sources, including data on air passengers, tourism spending, national park visits, and information from industry associations. The report specifically highlights the cost of passengers' lost time due to flight delays, estimated at $183.3 million.
Why the Impact Spills Over Outside the U.S.: Hubs, Connections, and the Domino Effect of Delays
The U.S. air system is one of the largest in the world, and a large portion of international itineraries relies on connections at major hubs. When capacity is reduced or delays increase in such a system, the consequences do not stop at domestic routes. A delay at one key airport can "pull" a series of delays, failed connections, diversions, and chain changes of crews and aircraft. In this scenario, passengers traveling between Europe and the U.S. more often lose their planned connection, and costs increase through additional overnight stays, ticket changes, and lost time. For business travelers, an additional problem is the loss of productivity and missed meetings, which is then reflected in companies' decisions about future travel.
In its January review, U.S. Travel highlights that the consequences of the shutdown spread to hotels, restaurants, small businesses, and local economies, as reduced visitor spending "empties" a whole range of services. The report specifically emphasizes how closures of federal attractions and reduced service availability reduce visits to communities that depend on tourist arrivals. This is particularly visible in large cities and regions with a high share of government institutions and business travel, such as the wider Washington, D.C. area, where the effects of the shutdown are also seen through weaker demand for accommodation and services. In the industry, they warn that, once damaged, traveler confidence returns more slowly than the operational recovery of the system itself, as travel decisions are planned in advance and are often made under "safety margin" conditions that the shutdown reduces.
The Most Sensitive Point: Aviation and the Working-Without-Pay Regime
In practice, a shutdown does not mean that all government services "turn off," but that part of the employees go on forced leave, while part must continue to work because their role is safety-critical. In the context of travel, this specifically refers to air traffic controllers and part of the Transportation Security Administration (TSA) staff. During the 2025 shutdown, these workers continued to perform their jobs, but without regular salary payments until funding was restored, which the industry described as operationally and psychologically unsustainable. Such a regime increases the risk of absences, and in a system sensitive to personnel shortages, this quickly turns into delays and cancellations. At the same time, stress increases in workplaces where concentration is key to safety, which the industry sees as an argument that the funding and status of critical workers must be better protected in future crises.
Associated Press reported during the 2025 shutdown that a prolonged funding break could increase delays and cancellations as pressure on unpaid workers mounts, and reminded of examples of earlier shutdowns when wait times at checkpoints lengthened and some services were temporarily limited. The same reports emphasized the structural shortage of air traffic controllers, meaning the system often has no "reserve" when some staff are absent due to fatigue or financial reasons. In such circumstances, "every percentage" of staff availability becomes important, so problems are first seen in longer queues, and then in flight schedules. For the industry, this is not just a question of passenger comfort, but a question of the reputation and predictability of the entire system.
FAA's Extraordinary Measures: Mandatory Flight Reductions at 40 Airports
The most visible sign that the system began to break in November 2025 were the extraordinary measures of the Federal Aviation Administration (FAA) and the Department of Transportation (DOT). The FAA announced an emergency plan according to which airlines had to temporarily reduce the number of daily operations at the 40 busiest airports, with clearly stated phases and dates. According to the official FAA announcement, the reduction started with 4% from Friday, November 7, 2025, with a planned gradual increase to 6% by November 11, 8% by November 13, and 10% from November 14, if the crisis continued. The FAA described the measure as a safety-oriented response to a situation where staff shortages and controller fatigue could turn into operational risks. In practice, such restrictions mean fewer available flights, more pressure on remaining capacities, and harder management of connections, especially in hubs that carry a large portion of traffic.
After the shutdown ended on November 12, 2025, measures began to ease. Politico reported on November 14, 2025, that the DOT was reducing mandatory restrictions from 6% to 3% due to improved air traffic controller attendance and a drop in incidents related to staff shortages. Associated Press then reported that the FAA was lifting the remaining restrictions and allowing a return to regular schedules, noting that the lifting is implemented when safety indicators and staff availability stabilize. Even in that phase, the industry warned that schedules cannot return "overnight" because an operational cycle is needed to return crews, aircraft, and slots to the usual level. This is an important detail for passengers: the formal end of the shutdown does not necessarily mean an immediate end to the consequences.
Hotels and Catering: Drop in Demand, Fewer Overnight Stays, and a Weaker Convention Season
In an AHLA statement from November 12, 2025, it was emphasized that since October 1, 2025, almost 6 billion dollars were lost in travel spending, according to U.S. Travel estimates. Airlines for America (A4A), according to the same statement, stated that more than 5.2 million passengers were affected by delays and cancellations from the beginning of the shutdown until that moment. AHLA specifically singled out the hotel industry: according to their estimate, each day of the shutdown "costs" about 31 million dollars in economic activity that would otherwise be generated by hotel stays, and by that date, the estimated loss of the hotel portion reached about 1.2 billion dollars in economic activity. The industry uses this part as an argument that the shutdown does not only hit "federal offices," but also the private sector that depends on a stable flow of people and services.
Such figures explain why the hospitality industry strongly joined the pressure on Congress. Fewer flights and more uncertainty mean fewer overnight stays, fewer business gatherings, and weaker traffic in restaurants and service activities. Particularly vulnerable are destinations that depend on state institutions, convention tourism, or visits to federal attractions. U.S. Travel in its analysis states that closures and service reductions at attractions such as the Smithsonian museums and national parks reduced interest and attendance, which then spilled over to local business entities in "gateway" communities. In practice, this is seen in canceled group trips, weaker traffic in weeks otherwise reserved for business events, and in bookings being postponed due to uncertainty.
New Shutdown from January 31, 2026: Why the Sector Fears a Repeat Scenario
The new funding break from January 31, 2026, comes at a time when the sector is still recovering from the fall crisis, which is why travel and hospitality associations insist on a quick political agreement. Business Travel News reported on February 2, 2026, that federal government funding expired on January 31, starting a new shutdown, and reminded that the previous one, ended in November 2025, was the longest in U.S. history. The industry's message is that risks mount quickly: even a short-term standoff creates a "signal" of uncertainty in the market, and a prolongation reopens questions about TSA staff and air traffic controllers, operational restrictions, and the reliability of flight schedules. It is particularly emphasized that passengers and companies are more sensitive to such signals after the 2025 experience, as they saw then that disruptions can turn into mandatory flight cuts.
For business travel, the risk is double. In conditions of uncertainty, companies postpone meetings and conferences or move them online, which directly spills over to air transport, hotels, and catering. At the same time, even when the shutdown ends, the return to normalcy is not instantaneous, as both AHLA and partners emphasized in November 2025: airlines must re-synchronize crews and schedules, and passengers face itinerary changes and burdened alternative options. In its January review, U.S. Travel warns that some of the consequences are carried over to the post-shutdown period because bookings and travel planning "freeze" during the crisis, and then do not immediately return to previous levels. That is precisely why the industry insists that a political agreement comes before measures similar to those from November 2025 appear on the ground.
What U.S. Travel and Partners Demand: Urgent Funding and Permanent Protection Mechanisms for Key Workers
The industry's messages are focused on two tracks: an urgent end to the funding break and structural changes that would reduce the risk of key parts of the air system again finding themselves in a working-without-pay regime. In a text published in January 2026, U.S. Travel emphasizes that shutdowns are not just political conflicts, but directly "take away" travel: official government travel stops, government-related business travel falls sharply, attractions close, and uncertainty grows, stifling demand. In the statement from AHLA and partners from November 2025, the operational issue was also emphasized: airlines were temporarily reducing schedules to adapt to FAA obligations and to prioritize safety, with a warning that normalization cannot happen instantly. From the industry's perspective, the fastest measure is simple: funding must be restored so that agencies can work at full capacity and key workers can be paid properly.
At the same time, it is requested to prevent a repeat of the situation where safety-critical workers become "collateral damage" of political negotiations. Partnership for Public Service, in its overview of shutdown consequences, emphasizes that such a situation affects a wide circle of federal employees: some are on forced leave, some work without pay, and the effects spill over to travel and business. In aviation, where safety standards are strict, the industry warns that prolonged pressure on workers and the staffing picture is a serious risk, even when flights formally continue. Therefore, along with urgent measures, long-term solutions are increasingly mentioned that would ensure stability of funding for key services even during political standoffs, so that a "salary crisis" does not turn into an "operations crisis."
How Comparable are the Estimates: Modeled Effects and Operational Indicators
The figures appearing in public come from different methodologies and different time cross-sections, so it is important to distinguish modeled economic effects from operational indicators. AHLA and A4A in November 2025 spoke of millions of passengers affected by delays and cancellations by a specific date, and about the daily losses of the hotel industry, which is the industry's communication in the moment of crisis. U.S. Travel and Tourism Economics, on the other hand, use counterfactual models and multiple data sources to estimate how much travel and spending would have been realized if the shutdown had not existed, and to quantify direct and total effects on the economy. The difference is important, but it does not change the fundamental message: even conservative estimates show damage measured in billions of dollars and millions of affected trips. In this sense, the industry uses analytics as an argument that crises must not be managed "ad hoc," but systematically.
The common message, regardless of methodology, remains the same: the scales are large enough to justify political urgency. U.S. Travel emphasizes that the consequences of a shutdown are not measured only in canceled tickets, but in reduced visitor spending and in "waves" that hit a range of activities. Once predictability is compromised, damage can persist even after the formal end of the funding break, because bookings and event plans are made weeks and months in advance. That is exactly why the sector, driven by the 2025 experience, more strongly seeks solutions that would prevent the air system from being brought again to a point where an extraordinary intervention like mandatory flight cuts is needed.
What Follows
How the situation after January 31, 2026, will develop depends on the speed of the political agreement and on whether a prolonged work stoppage similar to the one from 2025 will be avoided. For now, according to available information from industry reports, the sector is using last fall's experience as an argument that negotiations must not stretch to the point where the FAA must introduce extraordinary measures and passengers and companies give up on plans. U.S. Travel and partners warn that travel makes up a large part of the American economy and that the effects of a shutdown quickly spill over to various sectors, from airlines and hotels to local communities and small businesses. If the political gridlock is prolonged, the question of the operational endurance of a system that has already shown how sensitive it is when key services work under a regime of uncertainty will reopen.
Sources:- U.S. Travel Association – overview and assessment of the total economic impact of the 2025 shutdown ( link )- U.S. Travel Association / Tourism Economics – PDF „Impacts of the 2025 US Government Shutdown on Travel“ (December 2025) ( link )- American Hotel & Lodging Association – joint industry appeal for the end of the shutdown and data on the impact on travelers and hotels (November 12, 2025) ( link )- Federal Aviation Administration – announcement on the temporary phased reduction of the number of flights at 40 airports (November 2025) ( link )- Associated Press – report on possible consequences of a prolonged shutdown on travel (October 2025) ( link )- Associated Press – report on the lifting of FAA flight restrictions after the end of the shutdown (November 2025) ( link )- Politico – DOT eases mandatory flight reductions after government reopening (November 14, 2025) ( link )- Business Travel News – report on a new shutdown after funding expired on January 31, 2026 (February 2, 2026) ( link )- Partnership for Public Service – overview of shutdown consequences on travel, business and the work of federal services ( link )
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