Europe to see 'biggest-ever' increase in air fares next year, Ryanair chief says
(Bloomberg) -- Ryanair Holdings Plc Chief Executive Officer Michael O’Leary predicted a record increase in European air fares next year as the Middle East war continues to drive up oil prices, forcing airlines to pass on their fuel costs to consumers.
Ryanair chief executive Michael O’Leary predicts a historic surge in European air fares next year, with ticket prices expected to climb by up to 20 percent, according to a news conference in Brussels. The soaring Middle East war is the main driver behind this price hike, as it continues to drive up oil prices, forcing airlines to transfer their fuel costs to consumers.
O’Leary highlighted that airline margins will be put under strain, despite the increase in fuel surcharges failing to compensate for the higher oil expenses. He cautioned that the anticipated increase in airfares might not be sufficient to cover the dramatically higher oil bills. This grim outlook comes as the aviation industry grapples with a sharp rise in costs, despite travelers continuing to spend lavishly on air tickets.
Many European airlines, including Ryanair, have limited hedging capacity to protect against the higher oil prices, and there is less capacity available in the market due to some airlines struggling. Additionally, higher taxes further dim the industry's future. O’Leary disclosed that Ryanair is 85 percent unhedged next year, similar to most other European airlines.
As a result, Ryanair's shares plummeted by as much as 2.1 percent, marking a 25 percent decline for the year.
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