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Ryanair chief tips fares to rise over next three years

Ryanair forecasts a short-haul capacity shortage will push up fares over the two to three years following a traffic recovery it expects to dominate.

Michael O’Leary, Ryanair group chief executive, predicts a 20% shortfall in seat supply “across the next two to three summers”.

He said: “There will be a material shortfall in short-haul capacity and that, and environmental taxes, will increase fares.”

The EU proposed a new tax on jet fuel for intra-EU flights as part of its ‘Fit for 55’ package of measures announced last week aimed at cutting carbon emissions by 55% by 2030.

O’Leary said he expects to see the package “renegotiated” due to opposition from EU destination countries. But he conceded: “There is no question the sector as a whole is going to face increasing environmental taxes.”

Speaking as Ryanair confirmed it expects to carry 10 million passengers a month from August through to the end of the year, O’Leary argued: “There will be a meaningful shortage of short-haul capacity in Europe across the next two to three summers. We’re looking at a 20% shortfall in capacity.”

He pointed out: “We’ve seen failures. Norwegian Air has collapsed from 120 to 20 aircraft. Alitalia has announced a 25% reduction in capacity. TAP Air Portugal is in a similar boat.

“The only operators in Europe with short-haul aircraft on order are Ryanair and Wizz Air, and Wizz is in chaos. They’re suffering enormous operational challenges because they let so many pilots and cabin crew go.

“EasyJet seems to have zero growth. They certainly won’t be a competitor for us on new routes.”

However, O’Leary said “the real factor will be the slow pace of the short-haul recovery for network carriers”.

He insisted: “IAG, Lufthansa and Air France are sitting on slots they’re not using. Their short-haul traffic is primarily feeder traffic. Without long-haul flights to feed into there will be huge pressure on these network carriers.

“We don’t believe these long-haul, state-aid junkies will be able to dump short-haul capacity [on the market]. Their balance sheets won’t allow it. They have to repay their loans.

“The shortage of short-haul capacity will drive higher fares in the next two to three years.”

Ryanair reported a loss of €273 million for the three months to June despite carrying five million passengers in the final month of the April-June quarter, up from two million in May.

O’Leary forecast the airline would carry nine million this month, 10 million in August and a similar number in September.

However, he said: “All this is predicated on there being no disruption. We can’t eliminate the political mismanagement particularly in the UK and Ireland, but we plan to operate more than 80% of our pre-Covid capacity and to deliver about 70%-plus of our pre-Covid traffic.”

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