Ryanair is expecting a current slump in air fares to continue over winter 2024-25, following a five percent downturn in fares over what is usually the busiest period of the year, from July to September.
The remarks from Chief Executive Michael O’Leary echo jitters in the US travel market where CEOs and commentators have noted a “softening” in consumer spending after poorer than anticipated employment and job creation figures.
“No idea”
In typical mercurial style, O’Leary emphasised that he has “no idea” how the rest of the financial year would pan out, before going on to say it was “reasonable to expect fares will be down five-ish per cent through the second half of this year as well.”
He also pointed out another shift, remarking that “More people are flying with us this summer but at lower fares than last summer.” This, he said, was “good news for customers, bad news for shareholders.”
Expectation management?
The market seemed to disagree however, with Ryanair shares on the pan-Euro Index up immediately by five percent. It could be a case of clever expectation management at play. With word indicating fares will now stay stable at around minus five percent, the potential decline is not looking as bad as the airline predicted just a month ago, when the carrier warned summer fares would be “materially lower” than in 2023.
In fact fare predictions this year have been all over the show. The Financial Times notes average fare drops for the budget carrier of 15% in the first quarter and 10% in the second quarter. O’Leary then said prices would be up five to 10%, before they actually fell by five.
Blame game
Part of the issue is caused by well-documented problems in the Boeing supply chain that are “challenging” the airline’s ability to grow, O’Leary says. He has also hit out at what he says is the negative effect on growth of UK government policy to increase Air Passenger Duty – the tax UK flyers pay on air fares.
Also under fire in what looks like a splatter gun blame game, is the European Commission’s approach to air-traffic control (ATC) services, where O’Leary says the impact of staff shortages on early morning shifts or the “first wave” has a negative knock-on effect on daily flights. Having said that “ATC staff shortages have trebled”, in the next breath he said, “They have enough staff, they just won’t roster them on the first wave”, adding that “It is just incompetent management.”
