Memorandum
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- Delaney Sawyer via Fast Company
- Date
- Filed
- Business·3 min to read
- Re
Ryanair warns European airfares could rise 20% in 2027
ReRyanair warns European airfares could rise 20% in 2027
Europe's largest airline by passenger numbers says soaring fuel prices could push fares up by as much as 20% next year and is weighing pay freezes and leaner crew staffing to offset costs.
Flying around Europe could become considerably more expensive next year, even on budget carriers. Ryanair, Europe's largest airline by passenger numbers, has warned that airfares could rise by as much as 20% in 2027 as surging fuel prices squeeze its profits. The Irish budget airline said it may not be able to cover the gap through higher ticket prices alone.
On Monday, Ryanair said it is considering temporary employee pay freezes, reduced crew staffing ratios and greater use of artificial intelligence to help offset rising expenses. The company expects its annual fuel bill to increase by approximately $2.2 billion (€2 billion) during its fiscal year ending in March 2028, driven largely by higher oil prices linked to the ongoing conflict in the Middle East. Chief executive Michael O'Leary said in the company's earnings announcement that, unless the conflict is swiftly resolved, jet fuel prices are likely to remain elevated well into 2027.
Ryanair is not the only budget carrier under pressure. In the United States, Frontier Airlines recently reported a 71% increase in average ticket revenue per passenger during the third quarter compared with the same period a year earlier, rising from $39.74 to $67.82, which it attributed to fuel costs. Across the U.S., airfares rose more than 20% between January and September as airlines passed higher fuel costs on to passengers.
Like many airlines, Ryanair uses fuel hedging agreements to lock in prices in advance and protect itself from sudden jumps in oil costs. Roughly 80% of its fuel requirements through March 2027 are hedged at $67 per barrel. For the following 12 months, however, only about 25% of its needs are covered, at an average price of $95 per barrel, leaving the airline increasingly exposed to market prices.
O'Leary said he expects European fares to rise by double digits next year, potentially reaching 20%, as airlines pass some of those costs to travelers. Even so, such increases may not be enough to keep carriers comfortable. Ryanair is reviewing its expenses, including airport agreements and employee compensation, and is exploring ways to reduce crew ratios and use AI to improve productivity in administrative and support operations.
The warning follows a 15% decline in after-tax profit for the six months ending in September, which fell to $2.4 billion (€2.15 billion), even though the airline carried 6% more passengers. For travelers, Europe's famously cheap flights may become harder to find next year. With fuel prices rising for airlines worldwide, Ryanair is unlikely to be the only carrier charging more.
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Source: Airfare prices are soaring, and one airline says the worst may be yet to come