European airlines signal that the increase in ticket prices is almost at its peak

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European airlines have indicated that a multi-year rise in ticket prices is reaching a peak, raising first doubts about a boom that has lifted the sector from near-bankruptcy to profits during the coronavirus pandemic.

Ryanair warned that fares on its network this summer will now be only flat or “modestly higher” than last year, compared to a previous forecast of a 10 percent increase.

CEO Michael O’Leary said that while overall demand remained “positive”, Europe’s largest low-cost airline had already started cutting ticket prices to fill its planes.

“It’s a bit surprising that prices haven’t been stronger, and we’re not quite sure if that’s just consumer confidence, or a recessionary feeling across Europe,” he said.

“Consumers will want to travel. . . it’s good news for consumers this summer, and shareholder expectations will need to be adjusted a bit,” O’Leary said.

Ryanair’s caution follows last week’s results from rival easyJet, which also softened its forecasts for ticket prices this summer.

After battling for survival during the pandemic, Europe’s airlines have faced a wave of pent-up demand for travel, with a shortage of aircraft giving the sector even more pricing power.

According to EU data, average airline tickets across Europe in summer 2023 were between 20 and 30 percent higher than in 2019. Ryanair’s average fare rose 21 percent to just under €50 in its most recent financial year.

Analysts and industry executives still expect a strong and profitable summer season, but O’Leary’s comments indicate that consumers’ willingness to move up might have reached its limits.

Although easyJet said it was too early to predict summer fares, analysts noted that commentary on passenger revenue, a measure of average ticket prices that takes into account passenger numbers and distances flown, had weakened from earlier this year.

Passenger revenues would be “slightly higher” in the summer months, easyJet said. In January, the airline had said summer returns would be “higher” year on year.

The head of Portugal’s national airline TAP said he expected ticket price growth to slow, with gains of between 3 and 5 percent this summer.

“I think that’s okay. . . we are not looking at prices going down,” says Luís Rodrigues in the Financial Times.

The caution on fares came as Ryanair reported a 34 percent rise in after-tax profits to a record €1.9 billion in the 12 months to the end of March, as higher prices fueled a 32 percent increase in fuel bills. € helped compensate. 5.14 billion.

The Dublin-listed airline did not provide guidance for the current financial year but expected passenger numbers to increase by 8 percent to between 198 million and 200 million, a slightly slower growth rate than in the previous year.

Ryanair’s ambitious expansion plans have been hit by delivery delays. The airline said it now expects there will be a shortage of 23 Boeing 737 Max aircraft by the end of July and warned that “the risk remains that Boeing deliveries will slip further.”

“The final result for the . . . The fiscal year will be highly dependent on avoiding adverse events during fiscal year 2025, such as wars in Ukraine and the Middle East, extensive air traffic control disruptions or further Boeing delivery delays,” O’Leary said.

Ryanair also announced a €700 million share buyback, citing the need to use its ‘excess cash’. Former Conservative cabinet member Amber Rudd was due to join the airline’s board in July.

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