Analysis: Trading statements confirm softening in prices

Ian Taylor assesses updates from Ryanair, easyJet and Tui

Trading statements from Ryanair, easyJet and Tui in the past week confirmed a softening in flight and holiday prices this summer.

Ryanair chief executive Michael O’Leary was forthright in declaring an end to the fare inflation of the post‑pandemic period as he reported the carrier’s full-year results to the end of March on Monday.

He described recent pricing as “softer than expected”, with prices from April to June “requiring more stimulation than last year”, and said he was only “cautiously optimistic” peak summer fares would be “flat to modestly ahead” of last summer, “not 5% to 10% up as expected”.

The UK headline inflation rate was 3.2% in March, with a fall expected in latest figures due on Thursday.

O’Leary said: “Prices are still firm for the summer peak. But if there is weakness, we’ll be active in stimulating the market. All airlines are offering price stimulation.”

He pointed out Ryanair’s average fare “rose 21% in the last 12 months” and said: “We’ve come off two summers of post-Covid recovery and fares up by 20%. We thought they would be a bit softer. With an earlier Easter [this year] we expected April to be softer. But we did expect fares to be stronger in May-June because of constrained capacity.”

O’Leary noted: “There is some consumer resistance, perhaps a bit of a feeling of recession.

“When we stimulate prices, we see strong volume growth.”

He insisted: “We’re going to be aggressive on pricing. If prices are going to be a bit lower, we’ll lead that trend.”

EasyJet was cautious on pricing as it issued half-year results to March last week, reporting a loss of £350 million but an 11% increase in passengers and 5% increase in average seat revenue.

Chief executive Johan Lundgren forecast “another record summer” but refused to be drawn on fare expectations. He described yields as “slightly up” but said: “It’s too early to say how this will play out [in] summer and the lates market.”

Tui reported record revenue of €3.6 billion in second‑quarter results, also to March, with winter losses falling to €189 million and winter bookings up 9% year on year and average prices up 3%. The group reported summer bookings up 5% (and 3% in the UK) and average prices up 4%.

Chief executive Sebastian Ebel insisted: “We don’t have to be chasing the last customers. I expect normal last-minute business with normal prices.”

However, O’Leary insisted: “The weakness is on the leisure routes. There is a bit of a lack of spending across most markets. It’s widespread.

“But we’re in a place where pricing post-pandemic is considerably stronger.

“We’ve had two years of very strong pricing growth. If we have a summer of more modest growth, so be it.”

Ryanair reported a full-year profit of €1.9 billion after tax.

Both it and easyJet will operate 8% more capacity this summer than last.

Photo via Shutterstock/Piotr Mitelski

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