In March, U.S. airlines experienced a significant pullback in domestic leisure market demand due to macroeconomic uncertainty. This is predicted to impact Southwest more than airlines with strong international networks, premium product offerings, and robust cash flow from loyalty programs. The decrease in demand has led Southwest to further reduce its year-over-year capacity growth plans for the second half of 2025. The airline now expects its full year 2025 capacity to grow 1% to 2% compared to 2024. The softer demand from price-conscious travelers is resulting in discounting in the main cabin of the aircraft, which will put pressure on leisure-focused carriers like Southwest. Moody's forecasts that this softness will at least partially offset improvements Southwest expected from several strategic shifts including introducing bag fees, loyalty program changes, the introduction of premium products, and expanding its distribution to online travel agencies.