Ryanair chief executive Michael O’Leary has warned that European air fares could rise by as much as 20% in 2027 as airlines confront sharply higher jet fuel costs driven by the conflict in the Middle East.
O'Leary told reporters that many carriers are not hedged against increases in jet fuel prices, leaving them exposed to sudden cost shocks. He said the combination of rising fuel bills and limited hedging would put severe pressure on airline balance sheets, potentially prompting bankruptcies and takeover activity within the industry.
Industry context
Jet fuel is one of the largest single operating costs for airlines, and carriers commonly use hedging contracts to lock in fuel prices and reduce volatility. O'Leary's comments suggest that a significant share of European carriers may currently lack sufficient hedging protections to absorb a sustained spike in fuel costs without passing them on to customers or taking other measures to cut costs.
Market and consumer impact
If airlines raise fares to reflect higher input costs, travellers could face noticeably steeper ticket prices next year, O'Leary said. He characterised the potential rise as "record" for the region, and framed it as part of a broader reshaping of the industry if some operators fail to withstand the added financial strain.
O'Leary has frequently voiced strong views on industry economics and competition. His forecast underlines the sensitivity of air travel prices to geopolitical events that affect energy markets, and signals increased uncertainty for airlines and passengers as the sector watches fuel markets closely ahead of 2027.