The only way is up for air fares, it would seem. Ryanair on Monday posted an after-tax profit of just under €2.2 billion for the first six months of its financial year, and such is its confidence about the near term that the airline announced a new dividend policy that will see it distribute 25 per cent of its after-tax profit to shareholders each year.
Chief executive Michael O’Leary warned that air fares would continue to rise. Ryanair’s prices will rise by a “mid-teen percentage” in the three months to the end of December, the airline said, noting strong consumer demand and various capacity constraints.
Ryanair’s average fare for the six months rose by 24 per cent to €58, while in the second quarter the rise was 26 per cent to €65. It’s worth noting that in the comparable reporting period of 2019, the last full year before the pandemic, Ryanair’s average fares fell by 5 per cent for the half year and by 3 per cent for the second quarter.
Of course Ryanair isn’t the only airline increasing its fares: Aer Lingus owner IAG, Lufthansa and Air France-KLM also put through substantial increases this summer as they sought to regain lost profits from the pandemic.
Around the same time that Ryanair was announcing its results the Financial Times reported that Brussels was looking at the recent rise in air fares across Europe.
Adina Vălean, the EU’s transport commissioner, told the FT that EU officials were “looking into detail...of what is exactly going on in the market and why”. Average air fares across Europe were 20-30 per cent higher over summer 2023 compared with 2019, according to EU data released in October.
Consumers had better hope that moral suasion will work because the commission does not have the power to regulate air fares.
Which lands us back to the 32 million cap on passenger traffic at Dublin Airport imposed by Fingal County Council as a condition of a planning permission dating back to 2007. The airport is likely to hit that ceiling this year, with the Dublin Airport Authority planning to apply for a lifting of the cap.
The cap is opposed by Ryanair and Aer Lingus but in effect it strengthens their hold on Dublin Airport. It certainly does nothing to foster whatever competition there might be to help keep a cap on fares.
