Ryanair, Europe's largest low-cost airline by passenger numbers, has reported that the significant fare drops experienced over the summer have begun to ease, with expectations set for fare growth in the coming year. This comes as a relief after a challenging period marked by reduced profitability. During the peak summer season, Ryanair faced a notable decline in average fares, with a reported 10% decrease in the first half of its financial year ending September 30, 2024. This reduction was attributed to a combination of factors including high interest rates affecting consumer spending and the strategic decision by several online travel agents to cease selling Ryanair flights due to legal and regulatory issues.
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Despite these setbacks, the airline has seen a recovery. The fare drop moderated from 15% in the first quarter to 7% in the second, with projections for a fall of less than 5% in the current quarter. This improvement was highlighted by Ryanair's CEO, Michael O'Leary, who expressed optimism regarding the airline's future financial performance, pointing to capacity constraints as a potential catalyst for fare increases in the next summer season.
Ryanair's revised passenger forecast for the year ending March 2026 now stands at 210 million, down from an initial target of 215 million, reflecting adjustments due to anticipated delays in Boeing 737 MAX deliveries. This adjustment, however, is seen not just as a challenge but also as an opportunity. With fewer seats available due to delivery delays, Ryanair expects to leverage the situation to boost profitability through potentially higher fares.
The airline's first half of the financial year saw an 18% drop in after-tax profit, but the easing of fare falls indicates a stabilization in the market. O'Leary noted that the capacity reduction might serve to increase fares due to supply and demand dynamics, especially if the delivery issues persist. Looking forward, Ryanair is poised for a return to growth in fares, underpinned by its strategy to optimize operations and adapt to market conditions. The airline's resilience in navigating through the turbulent economic environment and its operational adjustments reflect its ongoing commitment to maintaining its position as a leading low-cost carrier in Europe.