Wednesday 21 March 2018

O'Leary says average air fares will rise a further 12pc this year

John Mulligan

Ryanair boss Michael O'Leary has said the airline's average fare is likely to rise 12pc in the next 10 months. The hike will follow on the heels of a 12pc increase that was also felt by passengers during the company's last financial year.

However, the airline said the bulk of the increase last year was due to the fact that the average length of Ryanair flights increased, as it flies to more relatively far-flung destinations such as the Canary Islands. That consumes more fuel and passengers consequently pay more.

A surge in oil prices due to political instability in a number of Middle Eastern and North African countries -- such as Bahrain, Syria, Libya and Egypt -- in recent months has piled the pressure on airlines.

Aside from paying staff, fuel represents the airline's single biggest expense. In its last financial year, Ryanair spent over €1.2bn buying fuel for its 270 or so aircraft.

Fuel bill

This financial year, even having bought most of its fuel in advance at a much cheaper price than it would currently have to pay, its fuel bill will be €350m more expensive.

But the airline has also been able to raise its fares simply because rivals have.

Deputy chief executive Michael Cawley conceded yesterday that as competitors raised their ticket prices to combat higher fuel costs, it enabled Ryanair to charge its customers more too.

But the rise in Ryanair's average fares also serves to underline the end of an era of rapid expansion at the airline, when it could march across Europe opening bases and driving up revenue and profits.

As the airline has matured, the opportunity for such expansion at such a rate has decreased, meaning passengers will find themselves getting charged even more for their tickets.

Irish Independent

Business Newsletter

Read the leading stories from the world of Business.

Also in Business