Michael O’Leary, the Ryanair boss and pioneer of low-cost travel in Europe, has said airfares are likely to rise for the next five years because flying has become “too cheap” to make profits as industry costs spiral.
His warning came as ticket prices rose across Europe and the US as passengers returned after coronavirus lockdowns and some airlines cut capacity because of staff shortages.
He told the Financial Times: “It’s got too cheap for what it is. I find it absurd every time that I fly to Stansted, the train journey into central London is more expensive than the air fare.”
O’Leary said he expected a combination of high oil prices and environmental charges to push the average Ryanair fare up from €40 (£34) to between €50 to €60 over the medium term.
He also criticised the UK government and what he called “the disaster” of Brexit, which had stopped airlines easily recruiting European workers, and thus worsened staff shortages this summer. “This is without doubt one of the inevitable consequences of the disaster that has been Brexit,” he said.
“Withdrawing from the single market, just so that they can say: ‘We got Brexit done’ was the height of idiocy. But then they are idiots.”
His comments come amid reports airlines are preparing to announce a new wave of cancellations next week.
On Thursday and Friday, passengers at Heathrow complained of long queues, cancelled flights and lost baggage as “schedule intervention” and disruptions at UK airports were exacerbated by strikes in Spain.
O’Leary is one of the first airline bosses to warn about an increase in fares in the longer term. The Irish airline had hedged the majority of its future fuel requirements for the rest of this year at $65 (£54) a barrel before Russia invaded Ukraine, saving it from the worst impact of the sharp rise in prices.
However, the Ryanair boss still believes fares will rise, as he expects oil prices to remain “structurally higher” for the next four or five years, “until we can wean ourselves off Russian oil and gas”. He added that he expects wider inflationary pressures to hit the airline industry next year, including staff costs and air traffic control charges, also highlighting rising environmental charges.
Ryanair has been virtually the only major carrier in Europe to dodge disruptions from staff shortages. EasyJet last month disclosed it had rejected 8,000 job applicants because of their nationality this year, most of whom were from the EU. Meanwhile, the UK Department for Transport said there had been disruption around the world because of staff shortages.