The sharp rise in fuel prices is not only impacting the automotive industry, but more recently it seems to be having a significant impact on the choice of holiday destinations that tourists visit thanks to the bargains offered by low-cost airlines. Ryanair's CEO, Michael O 'Leary, has announced that the era of cheap tickets priced under €10 is coming to an end.
The news was reported by the BBC news website, adding that the airline no longer plans to offer flights at extremely low prices as fuel costs are rising significantly. O'Leary further stated that the company's average ticket price is expected to increase from last year's €40 to around €50 over the next five years, which represents an increase of 25 percent over the given period.
Vacation costs will rise
Together with the ever-increasing inflation and the associated rise in the cost of living, this does not represent positive news for the public. Potential vacationers will have to pay tens of percent more per person for their much-desired vacation. Since other companies such as EasyJet and Wizz Air also operate on the principle of offering low-cost tickets, it is likely that we can expect a similar scenario in their case.
People will focus on cheaper alternatives
On the other hand, Ryanair's boss has said that he does not think that people will start cutting back on flights because of rising ticket prices. It is more likely that they will concentrate their choices on cheaper destinations to keep their budget within the set limit and at the same time treat themselves to a full-fledged holiday.
Impact on company shares
In response to the release of the information about the increase in flight prices, the company's stock market value was mixed during Thursday's trading day, but did not register any major losses. It was in the green at first, but later wrote off its profits. By 6 p.m. CEST, its value was below USD 75 per share, while just after the opening of the trading day it was around USD 75.5 per share.*
Ryanair's share value development over the last 5 years. (Source: Investing.com)
Commercial flights also face criticism over emissions
The commercial aviation industry is also currently facing pressure to reduce carbon emissions, in which it contributes approximately 2.4 percent globally. Campaigns on this issue are intended to convince people to switch to other modes of transport, such as road (where the trend is slowly but surely shifting to electromobility) or rail.
Olívia Lacenova, Analyst of Wonderinterest Trading ltd.
* Past performance is no guarantee of future results.
