Canada Slashes US Flights and Restricts Travel as Caribbean and Latin America See Record Tourism: New Report Reveals

Published on May 5, 2025

By: Rana Pratap

Canada’s dramatic reduction in US-bound flights and tightening of travel policies stems from escalating tariff tensions, growing political friction, and declining traveler confidence, as a new report reveals. While Canada distances itself from U.S. travel, tourism across the Caribbean and Latin America is reaching record highs, fueled by regional cooperation, rising airlift, and strong demand from non-U.S. markets.

Canada-U.S. Travel Relations Enter a Deep Chill

Political Fallout Behind the Travel Freeze

The breakdown in U.S.-Canada travel ties comes against a backdrop of deepening political rifts. President Donald Trump’s remarks branding Canada the “51st state,” combined with sweeping tariffs on Canadian imports, have inflamed public sentiment and triggered retaliatory measures.

The impact is now manifesting in travel behavior. As Canadian leaders push back diplomatically and economically, citizens are opting to spend their travel dollars elsewhere. A growing number are choosing European destinations or staying within Canada’s borders altogether.

Compounding the diplomatic fallout, the Canadian government has updated its travel advisories, warning citizens of heightened scrutiny at U.S. border crossings—including increased electronic device inspections and stricter entry enforcement. These warnings have been echoed by several other countries, including France, Belgium, Finland, Portugal, and the UK, reinforcing the notion that travel to the United States now carries added complications.

Cross-Border Travel in Decline

Recent data from U.S. Customs and Border Protection (CBP) reflects the depth of the downturn. Canadian entries into the U.S. fell by 12.5% in February and dropped a further 18% in March 2025. This sustained decline is backed by internal data from Flight Centre Travel Group Canada, which reports a 40% fall in Canadian business travel to the U.S. in early 2025.

The chill in travel is not limited to Canadian visitors. According to research by Tourism Economics, international travel to the U.S. is expected to decline by 15.2% this year. Key source markets like Germany and Spain have also reported significant drops in U.S. arrivals—down 30% and 25%, respectively, in March alone.

Airlines Reshape Strategy Amid Demand Collapse

Air Canada Leads the Retreat

Canada’s largest carrier, Air Canada, has been among the first to react decisively to declining U.S. travel demand. The airline is significantly scaling back routes to major U.S. cities including San Francisco, Miami, Houston, and Washington. Previously operating up to three daily flights between Montréal and San Francisco, Air Canada will now offer just one.

The airline is reallocating capacity to Europe, where demand remains robust and geopolitical conditions are viewed as more stable. New seasonal routes and increased frequencies to destinations like Paris, Rome, and Frankfurt mark a strategic shift toward higher-performing transatlantic markets.

WestJet Cancels U.S. Routes, Shifts to Europe

WestJet has followed suit by canceling a slew of U.S.-bound routes. Notably, the planned Vancouver–Austin route was canceled before launch due to weak demand. Earlier, WestJet scrapped flights from Calgary to New York-LaGuardia and Edmonton to Orlando.

Rather than attempting to revive underperforming U.S. services, WestJet is expanding in Europe, increasing service to London Gatwick and Dublin in anticipation of strong summer demand.

Porter and Flair Scale Back

Porter Airlines is trimming frequencies on select U.S. routes while strengthening its domestic footprint. The airline has also paused promotional campaigns for U.S. travel, reflecting hesitance among travelers and a strategic shift in marketing focus. Interestingly, Porter still maintains a 25% increase in U.S. capacity compared to 2024, though with more cautious deployment.

Flair Airlines, a budget carrier, has scaled back more than one-third of its U.S. flight schedule. With demand faltering, Flair is redirecting resources to intra-Canada routes and exploring new international markets outside North America.

Transatlantic Rebalancing Gains Momentum

Across the Canadian airline industry, one trend stands out: a decisive pivot toward Europe. High demand, favorable political conditions, and better profit margins are drawing carriers away from the U.S. market. The strategic shift underscores a broader rebalancing of Canada’s aviation focus—from a U.S.-centric model to a diversified, global approach.

This reallocation also reflects evolving traveler sentiment. Canadians appear increasingly drawn to destinations that offer both perceived political neutrality and cultural enrichment without the complications of current U.S. border enforcement policies.

Caribbean and Latin America Experience a Tourism Boom

While Canada freezes its engagement with the U.S. travel market, Caribbean and Latin American destinations are reaping the benefits of shifting tourism flows.

At the recent ALIS CALA (Caribbean and Latin America) conference, tourism leaders outlined the region’s resilience and rising appeal. From Mexico to Colombia and the Dominican Republic, destinations are seeing renewed strength in hotel occupancy, flight bookings, and cruise tourism.

Surge in Regional Airlift and Cruise Investment

To capitalize on the demand, destinations in the CALA region are ramping up intra-regional flights and expanding airport infrastructure. Puerto Rico, for example, is investing in runway expansions, ferries, and cruise terminals. New agreements with airlines like Iberia aim to boost connectivity with Europe and Latin America.

Cruise lines are also adapting. Carnival Corporation, among others, is working closely with governments to convert cruise visitors into long-term stayover tourists. The company has emphasized that cruise and resort sectors are now aligned in their goal to sustain visitor numbers and grow regional revenue.

Hotel Sector Performance Surges

According to STR data, hotel performance across the region is on an upward trend. Average Daily Rates (ADR) in the CALA market are now exceeding pre-pandemic levels. Occupancy is also strong in destinations like Brazil and the Dominican Republic, with more than 10,000 hotel rooms currently under construction in the Caribbean alone.

Patricia Boo, STR’s Regional Director for Latin America, noted that while some U.S.-facing markets like Ecuador remain sluggish, most regional destinations are seeing profit margins climb due to higher room rates and additional revenue sources.

Florida’s Risky Hotel Tax Overhaul

Even as international travel patterns shift, Florida—one of America’s top tourist destinations—is moving forward with legislation that could drastically alter its tourism funding model.

House Bill 7033 proposes redirecting revenue from the state’s Tourist Development Tax (commonly known as the hotel bed tax) away from marketing and promotion and into local government coffers for property tax relief. While the rate itself remains unchanged, the allocation could affect how well Florida continues to compete for tourists.

Industry Warns of Long-Term Impacts

Industry leaders have voiced concern. In Miami-Dade County alone, roughly $60 million is collected annually through the hotel tax, half of which goes to tourism promotion. Shifting this revenue could undermine the very engine that supports 200,000 tourism-related jobs in the area.

Rolando Aedo, COO of the Greater Miami Convention and Visitors Bureau, emphasized that for every $1 invested in tourism marketing, the return is $63 in economic impact. If the funds are diverted, the long-term loss in visitor spending could far exceed the short-term benefit of tax relief.

A Fragmented Outlook for North American Travel

Taken together, these developments point to a fragmented and reshaping North American travel landscape. While U.S.-bound travel from Canada sharply contracts, regions like the Caribbean and Latin America are surging, aided by favorable geopolitics, reinvestment in infrastructure, and traveler preference shifts.

At the same time, Florida’s gamble with its hotel tax structure introduces further uncertainty. As key markets rethink how to maintain or grow their share of global tourism, the contrast between regions doubling down on promotion and those scaling it back may soon yield measurable results.

Canada is slashing U.S. flights and restricting travel in response to rising tariffs, political tensions, and falling demand, while Caribbean and Latin American destinations see record tourism driven by regional growth and shifting global travel preferences.

The travel freeze between Canada and the United States is more than just a diplomatic spat—it’s a reflection of deeper trends in global tourism and geopolitical alignment. As Canadian carriers pivot to Europe, and as Latin American and Caribbean nations seize the moment to expand, Florida’s internal reshuffling of tourism resources could put its visitor economy at risk.

This new report reveals a continent in flux, where alliances, preferences, and policies are rewriting the rules of travel and tourism in 2025.