Ryanair warns of higher prices as net zero costs top €1bn

Telegraph

19-05-2025

Ryanair has warned that travellers face paying more for flights this summer as the budget airline battles soaring net zero costs.
Michael O'Leary, the Ryanair boss, said Europe's largest airline faced an 'environmental cost bill' that would be about €150m (£126m) higher than in 2024, surpassing €1bn for the first time.
Airlines were given allowances under the EU's Emissions Trading System for the amount of fuel they could burn without incurring green penalties.
These free allowances have been reduced by 50pc this year, before carriers will start having to pay in full from Jan 1.
At the same time, the introduction of compulsory requirements for the uptake of sustainable aviation fuel (SAF) at the start of this year is also adding to costs. Britain and the EU both require airlines to use at least 2pc SAF in 2025, rising to 10pc and 6pc, respectively, by 2030.
While the measures are aimed at incentivising the aviation industry to step up efforts to slash carbon emissions, Mr O'Leary warned they would inevitably 'get passed on in the form of higher fares'.
After factoring in a €100m hike in air traffic control fees and rising demand amid a lack of new planes from Boeing and Airbus, prices were likely to increase by around 6pc, he said.
Mr O'Leary added that constrained traffic growth nevertheless presented Ryanair with a 'big opportunity' to make up for a 7pc fare slump last year that triggered a collapse in earnings.
He said: 'We're certainly going to see a price increase this year. The only question is will we get back last year's decline. We think that we will get back most of it but not all of it.'
Mr O'Leary said that a 16pc drop in net profit in the year to March was partly 'self-inflicted' and a result of Ryanair's battle to stop online travel agents (OTAs) selling its seats at a higher rate, which led them to stage a boycott of its flights.
He said: 'I underestimated the impact. My view was that price-sensitive people were booking holidays and if they couldn't get them through the OTA they would come directly to Ryanair.
'In actual fact, what happened was they went to the other tour operators. Jet2, Tui seemed to have a bit of a beano last summer, whereas we had to price down aggressively.'
The chief executive said the situation was correcting itself this year, with 'very strong forward bookings' after Ryanair reached a series of agreements with the online agents.
Mr O'Leary said the drop in the oil price should also boost margins this year and that it could go lower still in the next 18 months as Donald Trump seeks to stimulate the US economy.
He said: 'Trump and his administration have realised that they screwed up on tariffs and that will lead to price inflation in America.
'The only way to counteract that in the run up to the midterms next year would be to materially drag down oil prices. So I think you'll see a production increase by Opec+ and the American shale guys.'
He said driving down the price of oil to $40 or $50 a barrel would also be an effective way of putting pressure on Vladimir Putin to reach peace terms in Ukraine without rearming Kyiv.
Mr O'Leary said he was hopeful that the threat of tariffs on airliners would recede once Washington turned its attention to a trade deal with the EU after accords with the UK and China.
He added that Ryanair, an all-Boeing operator, was not expecting further 737 Max jets this summer after taking five from the US company in April.
Boeing has offered to commence deliveries of a further 29 planes from September, but Mr O'Leary said they could be delayed until spring if the tariffs situation was not resolved.
The Irishman dismissed a spat with a US congressman over his suggestion that Ryanair might buy Chinese planes if prices were low enough as 'a politician playing politics'.
He said: 'It was just a stupid letter from some congressman whose iPhone was made in China. I wrote back saying we're a low-cost airline and we'll buy the cheapest jets we can.
'At the moment we're very happy that they are being manufactured in the US, but under no circumstances will we guarantee not to order Chinese aircraft if they cut prices by 50pc.'