Key facts
- Ryanair CEO Michael O'Leary predicts a historic increase in European airfares next year.
- Fewer seats and limited fuel hedging are expected to drive fares up by 10% to 20%.
- Higher jet fuel prices, influenced by the Iran war, are squeezing airline margins.
- Ryanair has hedged 15% of its fuel costs for next year at $85 a barrel.
European airfares are poised for their largest historical increase next year, with Ryanair CEO Michael O'Leary predicting a rise of up to 20%. O'Leary cited a combination of factors including airline bankruptcies, takeovers leading to fewer available seats, and airlines' limited hedging against soaring jet fuel costs. The ongoing conflict in Iran has driven up jet fuel prices, impacting airlines that have not sufficiently hedged their exposure. Ryanair, for instance, has only hedged 15% of its fuel costs for the upcoming year at $85 a barrel, while current spot rates are approximately double that level. O'Leary was in Brussels to announce that Ryanair will reduce its Belgian operations by cutting 20 routes and over one million seats due to an increase in the country's aviation tax. He also expressed optimism regarding the US certification of the Boeing 737 MAX 10 aircraft.