Ryanair’s CEO has forecasted a record increase in airfares in Europe next year, as companies face higher fuel bills due to the conflict in the Middle East.
Many airlines have not hedged against rising aircraft fuel costs, stated Michael O’Leary, who anticipated this would lead to bankruptcies. He estimates that these pressures will result in airfares rising by up to 20%, as reported by The Guardian.
"I believe that next year we will see an increase in airfares in Europe by 10%, 15%, maybe even 20%. Over the next 12 months, we will witness, I would say, the largest increase in airfares in European history," O'Leary stated at a press conference in Brussels.
Aircraft fuel prices have surged in recent months, as the conflict with Iran has disrupted supplies. This represents a significant portion of airlines' costs.
The International Air Transport Association (IATA) previously estimated that aircraft fuel prices would be 70% higher in 2026, reaching an estimated average of $152 per barrel for the entire year, compared to $90 in 2025. This development will reduce airlines' profits.
Ryanair and many other European airlines have secured their fuel needs for 2026 in advance, O'Leary said, adding that when the conflict with Iran erupted at the end of February, Ryanair had covered 80% of its fuel needs at a price of $67 per barrel.
However, the head of Europe's largest airline stated that most European operators, including Ryanair, have not hedged significant portions of their fuel needs starting from April 2027, which would protect them if oil prices remain high.
"For next year, 85% of our fuel needs are not covered by such contracts, and most other European airlines are in a similar situation," O'Leary said.
Ryanair's contracts for 2027 cover 15% of fuel costs at $85 per barrel, he added, while current market prices are around double this level.
In July, easyJet reported an annual increase of £105 million in fuel costs. The company stated it had hedged 62% of its fuel needs for the first half of 2027 and 37% for the second half of the year. In October, the operator announced it would cut 700,000 seats from its winter flight schedule in an attempt to save fuel.
During his visit to Brussels, O'Leary announced that Ryanair will cut 20 routes and over a million seats from its flight offering in Belgium for the winter season, following the federal government's decision to raise the air transport tax from 2 to 7 euros starting in January.
O'Leary is just the latest in the aviation industry to warn of the sector's bleak prospects. Industry leaders have already stated that some airlines will struggle to survive the shock of rising fuel prices.
Passenger surveys show that they expect higher fares and are willing to pay more, but airlines do not know how long consumers will be able to afford more expensive tickets.