European air fares should rise, says Ryanair director

Michael O'Leary, head of Ryanair, stated that short, low-price trips around Europe tend to become more expensive. The statement was made in an interview with CNBC, shortly after the company released its numbers in a conference call this Monday. According to InfoMoney, the executive made this prediction.

Still according to this source, the director estimates that European tickets will rise by 10% next year and that the adjustment could reach 20%. This calculation falls exactly on the range of flights that popularized cheap transport on the continent.

Ryanair is seen as the world leader among low-fare airlines, which gives weight to its forecasts for the sector. When the company that most operates in this model talks about adjustments, the market tends to pay attention.

For the executive, what puts pressure on values ​​is the conflict in Iran, which has made fuel more expensive. As fuel has a direct impact on the operation of an airline, the increase reaches the price of tickets without any taxes in between, just because of an external shock in the price of an input.

According to the same report, those who should feel the adjustment most are North Americans who intend to visit the continent next summer. For this group, spending on travel within Europe weighs heavily on the budget.

How this could impact the market

If the increase in fares is confirmed, the effect tends to appear in the demand for tickets and in the companies' margins, as more expensive fuel reduces the space to absorb costs without passing them on. For those who follow the sector, the point of attention is the ability of airlines to pass adjustments without losing passengers. This content does not indicate whether any asset is worth buying or selling, nor does it project how high prices may reach, as everything depends on the direction the war and the price of fuel take.

Automatically translated from Portuguese.