Ryanair repeated its warning of disruption to UK flights from Brexit this week as leading budget carriers reported soaring passenger numbers but pressure on fares.
The Irish carrier threatened to cancel services and switch aircraft from the UK “if we don’t have certainty by autumn 2018”, after talks on Britain’s exit from the EU resumed last week.
Ryanair chief executive Michael O’Leary said: “We remain concerned at the uncertainty.” He warned: “There may not be sufficient time or goodwill to negotiate a replacement [for the EU Open Skies agreement] which could result in a disruption of flights from April 2019.
“We seek clarity on this before we publish our summer 2019 schedule in the second quarter of 2018. If we don’t have certainty about the legal basis for the operation of flights by autumn 2018, we may be forced to cancel flights and move some or all of our UK-based aircraft to Continental Europe.”
Wizz Air, based in Central Europe but now with a UK base at Luton, confirmed it would seek a UK air operating certificate (AOC) to ensure it can continue flying to and from Britain. EasyJet announced last week that it is awaiting an Austrian AOC to allow it to operate as both an EU-registered and a UK airline.
Jozsef Varadi, Wizz Air chief executive, warned: “It is becoming increasingly likely there will not be an early deal [on aviation]. We can’t keep speculating. We don’t know how the situation will play out.”
The operational uncertainty comes amid continuing concern about overcapacity.
Ryanair announced a 12% rise in passengers and a 1% increase in average fares in the three months to June. However, the year-on-year comparison was distorted by Easter falling in April this year but in March in 2016, with Ryanair forecasting a 5% drop in average fares over the summer as a whole despite a forecast 11% rise in traffic.
The carrier predicted a further 8% fall in fares this winter even as it increases traffic by another 7%. This comes on top of a 13% drop in Ryanair’s average fares in the 12 months to March 2017 and after the carrier took delivery of another 14 new aircraft in the three months to June.
Wizz Air reported a 25% increase in passengers in the three months to June, but with average ticket prices unchanged year on year – although increased ancillary revenue pushed revenue per passenger up 2.8%.
Chief corporate officer Owain Jones said Wizz managed to maintain prices because “the Central and Eastern Europe market is not saturated like western Europe”.
EasyJet reported a near 11% increase in passenger numbers for the same three months against a 9.5% rise in capacity and a 2.2% increase in revenue per seat. But chief executive Carolyn McCall forecast average seat revenue would be down 2% year on year over the summer as a whole and pressure on yields would extend into this winter. She said: “Pricing is not going to bounce back.”
UK carrier Jet2.com – now also the UK’s third-largest tour operator and closing on Thomas Cook – reported a 5% drop in yield per fare in the 12 months to March.
The pressure on fares is set to increase from the weakness of sterling, with household disposable income in the UK falling 2.7% on average in the 12 months to June, a year after the Brexit referendum.