Don’t expect supercheap airfares to return anytime soon, budget-airline boss warns

Ryanair CEO Michael O’Leary expects people to continue flying despite high inflation.Horacio Villalobos / Getty Images

  • Ryanair’s CEO said the airline’s average fare for the next five years would be about 50 euros.

  • Michael O’Leary told the BBC rising fuel costs meant the lowest fares may not return for years.

  • He said he still expected people to fly often, with more travelers switching to cheaper airlines.

Travelers expecting the return of rock-bottom airfares on offer before the coronavirus pandemic shouldn’t hold their breath.

Michael O’Leary, the boss of Ryanair – Europe’s largest carrier by passenger number – told the BBC he expected the airline’s average fare over the next five years to be about 50 euros, or $ 51, compared with an average of 40 euros last year.

“There’s no doubt that at the lower end of the marketplace, our really cheap promotional fares – the 1 euro fares, the € 0.99 fares, even the € 9.99 fares – I think you will not see those fares for the next number of years, “O’Leary told BBC Radio 4’s” Today “program.

He blamed the rise in ticket prices on soaring energy prices that have pushed up the cost of jet fuel by about two-thirds over the past 12 months.

Along with staff wages, fuel is the biggest cost for airlines, but prices can be difficult to predict. That leads many to “hedge” against increases by agreeing on contracts to buy fuel for a certain price, but this tactic can backfire if prices suddenly fall significantly.

Despite the high rate of inflation giving consumers less money to spend, O’Leary told the BBC he still expected people to fly often – and to choose cheaper airlines such as Ryanair.

“We think people will continue to fly frequently, but I think people are going to become much more price-sensitive, and therefore my view of life is that people will trade down in their many millions,” he said.

Demand for tourism has rebounded strongly in 2022 after two years of coronavirus-induced restrictions with cooped-up travelers returning to the skies in huge numbers, putting pressure on airports and airlines still struggling to recruit workers after mass layoffs early in the pandemic.

Ryanair carried 16.8 million passengers in July, compared with 9.3 million in the same month last year, in planes that were 96% full, up from 80%. The airline carried 142 million passengers in the first seven months of the year – 102 million more than in 2021.

Read the original article on Business Insider

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