Ryanair boss says fares will fall up to 15% this winter
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- 08 Nov 2020
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Michael O’Leary says more competition is driving cheaper fares but bemoans UK government’s lack of Brexit strategy.
Ryanair’s chief executive has said fares in Europe will fall heavily this winter as he criticised Theresa May for having no strategy for Brexit.
Reporting results for the first half of the year, Michael O’Leary said there would be “extraordinary fare declines” over the year.
The short-haul airline’s average fare fell 10% in the six months to the end of September, partly due to the conversion of sterling fares, which account for a quarter of its revenues, into euros. It predicted average fares would drop by 13-15% in the six months to the end of March.
Ryanair said it cut fares in response to expansion by competitors and that lower fuel prices and cost cuts would help pay for the reductions. O’Leary said Ryanair would aim to fill seats at whatever price it could sell them to gain market share. The airline claims its average fare, with one checked bag, is now €46 (£41).
In the medium term, however, a hard Brexit would push up air fares, O’Leary said. “What is inevitable … is that there would be less capacity in the UK – and that means higher prices.”
He said the company’s first-half performance was creditable in a period marked by terrorist attacks, airport strikes and the effect of the Brexit vote. Pre-tax profit rose 6% to €1.31bn.
Ryanair boss Michael O’Leary
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Ryanair boss Michael O’Leary campaigned for the UK to remain in the EU.
He said falling prices were good news for travellers but his shareholders would have to wait to reap the benefits of Ryanair’s growth. The airline increased its target for annual passengers in 2024 to 200 million from 180 million.
The Dublin-based carrier said Brexit uncertainty was hanging over its business. It has scaled back plans to expand in the UK and shifted capacity to airports in Italy, Germany and Belgium.
Last month, Ryanair said annual profit would be lower than expected due to the 18% fall in the value of the pound since the referendum on 23 June.
O’Leary, who campaigned against Britain leaving the EU, said Theresa May’s government had no strategy for Brexit. “The UK government clearly has no idea what it’s doing. It has no agenda in terms of negotiations. I don’t think Mrs May or any of her ministers have any idea what they are doing.
“The agenda will be set by the Europeans. There is no incentive on the Europeans to help her or to negotiate.”
He added that the government “seem to be determined to make it up as they go along, and the economy is going to fall off a cliff in two years time. The UK economy is in real trouble. It hasn’t collapsed because you haven’t left yet.”
He warned that British competitors would have to restructure unless they could stay in the single European aviation market. “On the assumption they leave the open skies agreement, we probably can’t operate the UK domestic routes. That’s a small thing for us because we only have less than 1% of our capacity here.
“But easyJet have over 40% of its capacity on intra-EU routes, which is probably unsustainable,” he added. “And IAG [the British Airways owner] gets broken up – you have foreign ownership restrictions as well as operating licences. It’s what we call in the industry ‘a regulatory clusterfuck’.”
He criticised the government for having agreed a secret deal with Nissan while ignoring the aviation industry. O’Leary said: “The airlines employ far more people in the UK than fucking Nissan does.”
The company’s shares rose 5.3% to €13.44.
