'Brace yourselves': Passengers warned over 'sharp increase' in air fares following Ryanair's €2bn fuel cost hit
Ryanair has said it is considering pay freezes and increased use of AI to help offset a surge in fuel costs next year.
The Dublin-based airliner said it expects jet fuel prices to “remain elevated well into 2027” because of the continued conflict in the Middle East.
The company currently has around 80 per cent of its jet fuel hedged at much lower prices than the market rate but will see this fade out following the end of the financial year.
As a result, Ryanair said it is currently predicting a jump of roughly €2 billion (£1.7 billion) in its fuel bill for the year to March 2028.
It said it expects European short-haul airfares to “increase materially” to reflect higher fuel prices but this is not likely to fully offset the increase.
Bosses added that the group is therefore reviewing all costs, with a focus on areas such as labour agreements, which could lead to temporary pay freezes, and lower crewing ratios.
Ryanair will also review the “increased use of AI to drive further operational and back-office and support functions productivity”.
It came as the company revealed that profit after tax fell by 15 per cent to €2.15 billion (£1.79 billion) for the half-year to September, compared with a year earlier.
Revenues increased by 3 per cent to €10.08 billion (£8.41 billion), driven by 6 per cent increase in passenger numbers.
But the firm saw operating costs lift by 10 per cent for €7.69 billion (£6.42 billion) for the period.
Earlier this year, Ryanair said it would cut its traffic target for the year from 216 million passengers to 214 million in an effort to offset increases in unhedged fuel costs.
Michael O’Leary, chief executive of the business, said: “While third-quarter demand is strong, with fares trending modestly ahead of the same quarter last year, the booking window remains closer-in which reduces visibility.
“The third-quarter’s fare outcome will heavily depend on the strength of close-in October/November school mid-term and Christmas bookings.”
Dan Coatsworth, head of markets at AJ Bell, said customers should prepare for an increase in the cost of flying throughout the industry.
He said: “Travellers should brace themselves for a sharp increase in the cost of flying unless oil prices fall substantially from current levels.
“Many airlines have navigated this year’s oil price spike thanks to forward hedging, having locked in large swathes of fuel costs before the Iran war drove up energy prices. Those hedges will soon roll off, meaning the airline industry faces significant cost pain.
“The natural response will be to jack up prices and to cut back on capacity, but that might not be enough to offset the extra costs.
“It’s possible that baggage charges go up, onboard food and drink costs increase, and airlines seek to operate with fewer staff and freeze the wages of those who do get shifts.”