Demand has been weaker than Aer Lingus expected five or six weeks ago amid continued coronavirus restrictions and opposition to international travel in Ireland, its chief executive Sean Doyle said.
Ireland has just 15 countries on its approved Green List list and is demanding travellers from countries including Britain, Spain and the US to quarantine.
The Government also continues to advise residents against all non-essential travel, even to approved destinations.
"If we look at the wider demand, it is not recovering the way we would have hoped maybe five or six weeks ago. The narrative around travel has been negative in the period," Sean Doyle said.
Aer Lingus is part of International Airlines Group that also includes British Airways.
Ireland's success in attracting multinational foreign direct investment, which the Aer Lingus CEO said was around five times higher than the European average, could be damaged, he said.
"We have built our economic model on being open for business, on being a global economy," Mr Doyle told the Oireachtas Committee on Covid-19 Response today.
"I do think that we are taking that for granted at the minute and not understanding the consequences for that sector if we don't enable connectivity," Mr Doyle added.
His comments came as global airlines cut their coronavirus recovery forecast today, saying it would take until 2024 - a year longer than previously expected - for passenger traffic to return to pre-crisis levels.
The chief executive of Ryanair DAC told the committee that Ireland was on outlier in Europe in terms of its response to the threat posed by aviation to the spread of coronavirus.
Eddie Wilson said Ireland was the only EU member to persist with travel restrictions.
Addressing TDs and Senators at the Covid Committee, he called for the Green list to be expanded to include all EU 27 countries as well as the UK.
He warned that without loosening the current restrictions, severe damage would be done to the economy by the end of the year from which it would take several years to recover.
Ray Gray, CFO of the state airports body, the DAA, told the Committee that Dublin airport was seeing around 15,000 passengers passing through the terminals every day now.
They're coming in or going out on around 200 daily flights, he said. That compares to a pre-Covid schedule of around 600 flights.
Less than a third of those flights were full, he said.
"And that would be on a good day," he added.
Mr Gray called for a change to the regime whereby passengers had to self-isolate for 14 days on arrival here from a non-Green list country.
He said the onus should be on the passengers themselves to prove that they don't have Covid on arrival by taking a test 72 hours prior to traveling and producing proof that it was negative for coronavirus.