Plane tickets have been getting more expensive recently, partly because of the oil crisis brought on by the war in Ukraine and partly because of the sudden rise in demand after 2 years of pandemic. While most of us are hoping this is only a temporary upsurge, Ryanair CEO Michael O’Leary disclosed in an interview for the Financial Times that he believes this will be the new norm for a at least the next 5 years.
During the interview, O’Leary revealed he thinks flying has got too cheap to sustain the industry, especially in the face of increased oil prices and higher environmental taxes. “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”, he said.
He also stated that, particularly in the case of the UK, Brexit has also had a great impact on the aviation industry. Airlines are no longer able to higher personnel from the EU, leaving them with a huge labour shortage. “This is without doubt the inevitable consequences of the disaster that has been Brexit. Withdrawing from the single market just so they can say ‘We got Brexit done’ was the height of idiocy. But then they are idiots”, O’Leary critiqued the British government.
It has been my doing. I made a lot of money doing it. But ultimately, I don’t believe air travel is sustainable over the medium term at an average fare of €40. It’s too cheap at that. But I think, you know, it will still be very cheap and affordable at €50 and €60.
Michael O’Leary, Ryanair CEO, for the Financial Times
O’Leary looked back over the journey of the airline. He was the one who reduced costs to offer cheap plane tickets to customers and, in the process, turned Ryanair into the biggest airline in Europe. Now he believes low-cost fares are simply no longer sustainable for the industry. All in all, he estimates that the average price of a Ryanair ticket will rise from €40 to €50-€60 for the next few years, which, he says, is still on the affordable side.
Another cause for the price increase is the oil crisis. Although this year, the Irish airline had managed to hedge most of its necessary fuel before the war broke out, O’Leary highlighted that “oil prices will remain structurally higher for the next four or five years, until we can wean ourselves off Russian oil and gas”.
Talking about the current chaos surrounding the industry, he mentioned he is sympathetic to the rival airlines. Ryanair is not as affected by delays and cancellations since, during the pandemic, it decided to lower the salary of its staff and keep it hired, rather than dismiss it. Other airlines are currently struggling to keep their intended flight schedule due to severe staff shortages. “Covid has been unbelievably difficult to manage your way through”, O’Leary remarked.
Lastly, he addressed the environmental charges airlines pay to offset their carbon footprint. “It is manifestly unfair and inequitable and is distortive… there has to be a fair system”, he commented on the EU emissions trading system (ETS). The ETS currently only covers intra-European flights, but O’Leary firmly believes it should also be extended for long-haul. His opinion is shared by Europe’s airlines. Having homogenous worldwide measures was one of the main talking points during last week’s Connecting Europe Days, when the European Commission and representatives of the aviation industry met in Lyon to discuss the future of aviation and its pathway to net-zero.
