Rise in oil prices increases risk of airfare hikes

The persistence of high oil prices has increased cost pressure on jet fuel, one of the largest expense items for airlines. This situation has brought with it warnings that it could be reflected in airfare prices as a hike in the coming period.

Ryanair CEO Michael O'Leary stated that they expect a limited decline in ticket prices for the July-September period, but that the outlook for the final quarter of the year and the first months of 2027 remains uncertain. O'Leary said, "If oil prices continue to remain high until next year, I think there will be a significant increase in airfare prices."

Tensions in the Middle East and concerns regarding energy supply are contributing to the price of a barrel of Brent crude remaining above $100. This rise has been reflected more sharply in the jet fuel used in the aviation sector.

According to data from the International Air Transport Association (IATA), the price of a barrel of jet fuel reached $171 in the week ending September 4. This level is approximately 90 percent above last year's average.

Ryanair has secured 80 percent of the jet fuel it needs for the summer period at pre-determined prices, providing protection against short-term spikes. However, the fact that the company's hedging rate for 2028 remains at the 15 percent level indicates that cost pressure could become more visible in the coming years.

O'Leary had previously warned that high jet fuel costs could increase the risk of bankruptcy for airlines in Europe with weaker financial structures.

News Source: 12punto