Thursday 22 February 2018

Airfare wars to benefit flyers - Ryanair boss

Air passengers should benefit from a drop in fares
Air passengers should benefit from a drop in fares
John Mulligan

John Mulligan

Holidaymakers should benefit from even cheaper airfares as airlines fight it out by lowering ticket prices after the price of oil slumped in recent months.

Ryanair said that it expects to pass on most, if not all, of the lower costs it will see from cheaper oil to passengers.

Oil prices have tumbled by about half over the past few months and that drop should now start to filter through to air passengers.

Shares in Ryanair fell more than 6pc yesterday in Dublin as investors fretted about the airline's future profits as competition for passengers intensifies amongst Europe's airlines.

That share decline was despite the airline making a profit of €49m in the three months to the end of December - much more than had been expected by financial analysts.

Ryanair has already bought most of the jet fuel it needs for this year and next, but at a higher price than some of its rivals. Some of those rivals don't buy as much fuel in advance.

But Ryanair boss Michael O'Leary has insisted that his airline will aggressively price its tickets to keep up with lower fares offered by other carriers, paving the way for an airfare showdown.

"On balance, there's more likely to be more price competition over the next 12 months, particularly in the winter of 2015/2016," he said. "Some of the smaller airlines in Europe will benefit from the lower oil prices and they will use that to try to respond to Ryanair's continuing growth."

He said that even in the current three months that end in March, Ryanair's average fares are likely to fall by between 6pc and 8pc.

Ryanair's average fare was €48 during the three months to the end of December, which was 2pc higher than in the corresponding quarter in 2013.

"Periods of lower oil prices are generally followed by periods of downward pressure on fares," said Mr O'Leary.

Ryanair will announce new German bases in coming weeks as part of a plan to capture between 15-20pc of that market within the next five years. Lufthansa is currently the biggest carrier in Germany.

Mr O'Leary has also predicted that airlines that introduced fuel surcharges years ago, when oil prices started to spike, will start to eliminate them.

"Those fuel surcharges will come off," he said.

"We have the wherewithal to become much more aggressive on pricing going forward, particularly at those primary airports where we are arriving at a large proportion of market share very quickly," he added. "That will continue into next year."

"We certainly intend to be very aggressive in all markets on our pricing," he said. "If that results in softer pricing next year, well and good; it just means a better result for our customers and a worse result for our competitors."

Mr O'Leary said the growing price competition has been evident across Europe and hasn't been restricted to one particular market.

Irish Independent

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