Ryanair's chief executive, Michael O'Leary, warned on Tuesday that European airfares could rise by as much as 20% in 2027 due to escalating jet fuel prices linked to the ongoing conflict in the Middle East. O'Leary stated that many airlines are not adequately hedged against rising fuel costs, which could lead to bankruptcies and consolidations in the industry. He described the potential fare increases as possibly the largest in history for Europe, citing a projected rise of 10% to 20%.
Key Details
Jet fuel prices have surged recently, primarily due to disruptions in supply caused by the war on Iran. O'Leary noted that Ryanair had hedged about 80% of its fuel requirements at $67 a barrel before the conflict began. However, he indicated that the airline is 85% unhedged for 2027, with only 15% of its fuel costs covered at $85 a barrel, while current spot rates are nearly double that.
Background
Other airlines are also feeling the pressure. EasyJet reported a £105 million increase in fuel costs for the year ending in July. The airline has hedged 62% of its fuel needs for the first half of 2027 and 37% for the second half. In response to rising costs, EasyJet announced it would cut 700,000 seats from its winter schedule to conserve fuel.
Rising airfares could affect travel demand and airline profitability across Europe, particularly for budget carriers like Ryanair and EasyJet. Higher ticket prices may deter consumers, impacting overall travel volumes. Watch for further updates on fuel price trends and airline earnings reports in the coming months.
Based on reporting by: theguardian.com, politico.eu