“I think there will be no more ten euro bills because oil prices are much higher since Russia invaded Ukraine. Our really cheap promotions […]I think we won’t see those rates in a few years,” he told BBC Radio 4 on Thursday.
Low-cost airlines such as Ireland’s Ryanair or its British rival Easyjet have shaken up air travel over the last twenty years, lowering prices, resulting in an increase in short trips, particularly weekend city breaks.
From 10 to 50 euros
And according to Michael O’Leary, average ticket prices on Ryanair are expected to increase by around €10 to around €50 each way over the next 5 years.
Which, given the cheap fare structure with lots of surcharges, especially for luggage, could quickly add up to several hundred euros or pounds for a total return trip and undermine demand. The rise in oil prices over the past year (+36% for London-listed Brent) has weighed particularly heavily on the costs of so-called “low-cost” companies compared to traditional airlines, but is also weighing on household budgets.
Annual energy bills are set to rise by several thousand pounds per household on average over the coming months in the UK, where inflation could top 13% by October, according to the Bank of England.
In the face of price increases that reduce the purchasing power of the British, strikes are multiplying in the country and also affecting air transport: for example, on Wednesday evening the security staff at Leeds Bradford airport (northern England) announced a strike for the end of August for wages, which promises to disturb the return from vacation.
However, Michael O’Leary would like to believe that demand for air travel will continue and that low-cost airlines will do well given consumer budget constraints.
He also protested on Thursday against Brexit, which has severely restricted European workers’ access to the UK, where they previously held hundreds of thousands of jobs.
“The labor market is very tight, particularly for low-skilled jobs in hospitality, sales and agriculture, as well as security and baggage handlers at airports,” the chairman said.