Dhe founder and CEO of low-cost airline Ryanair, Michael O’Leary, has complained that plane tickets are “too cheap”. Due to rising costs, he forecasts a 25 to 50 percent increase in prices for his airline. It is “absurd” that the Ryanair flight to Stansted, about forty miles north of central London, costs less than the train journey to central London, O’Leary said in an interview with the Financial Times.
For the future he sees significant price increases due to higher fuel costs and environmental taxes. The average ticket for the Irish low-cost airline, which he estimated at 40 euros, will cost 50 or 60 euros in the medium term. That is still very cheap. The previous ticket prices are not sustainable. The airlines would no longer make a profit, said O’Leary, who has built the Irish airline as a pioneer of low-cost, minimal-cost flights since the 1990s.
Lack of staff partly due to Brexit
Currently, Ryanair has partially protected its kerosene requirements for this year from the high oil price by means of a “hedge”, i.e. forward transactions. O’Leary’s airline has hedged oil at $65 a barrel. After Russia’s invasion of Ukraine, the price of oil rose sharply and is currently $111 a barrel for North Sea Brent. Next year Ryanair will also feel the full force of these high prices.
O’Leary also points to the rising cost of carbon credits. Air traffic in Europe has been covered by emissions trading for some time. Airlines have to pay a price per tonne of CO2 emissions in the EU and Great Britain. O’Leary called for these emission payments to also be introduced for long-haul flights outside the EU, which EU environment ministers had only recently rejected. O’Leary called this “manifestly unfair” and a distortion of competition.
He also partly blames Brexit for the staff shortages at many British airlines and airports. Unlike many other airlines, Ryanair has so far been able to largely avoid flight cancellations due to staff shortages. British Airways, Easyjet, Lufthansa and others had to cancel thousands of flights.