Ryanair prices set to increase
Fares on Ryanair flights are expected to increase by 12%, according to the airline's latest financial report.
Revenue has increased by 29% from the end of June last year, jumping from £896.8 million (£787.7 million) to £1.1 billion. In spite of these figures Ryanair's CEO Michael O'Leary has warned that fares will rise.
"We expect average fares in the financial year of 2012 to rise by up to 12% due to the better mix of new routes and bases, our winter capacity cuts, higher competitor fares and fuel surcharges," he says.
He also says that the perceived growth in revenue is misleading, due to the April/May 2010 Icelandic ash clouds, which grounded many flights, skewing the figures: "Traffic growth was flattered by the unnecessary airspace closures in April/May 2010, which led to the cancellation of 9,400 flights, and the loss of almost 1.5 million passengers."
O'Leary has also put much emphasis on "stubbornly high" fuel prices, rising by 49% in a year - although Ryanair's report reveals that the airline still managed to record a profit after tax of £139 million.
In addition, O'Leary warns that passengers may be met with additional extra charges when booking flights with the airline. Ryanair is currently trialing a 'reserved seating' system - where passengers have the option of paying an extra £10 for one of 21 extra-legroom seats.
At the moment, it is only available on selected routes but "if successful, we will roll out reserved seating across more of our network this winter", he adds.
Bob Atkinson, travel expert for travelsupermarket.com says that low-budget airlines such as Ryanair will inevitably have to look at ways of reducing their own costs or raising extra revenue to compete with fuel increases.
"The predicted trend for fuel prices is ever rising and if airlines can't cut costs elsewhere then they will have to find other ways to cover the shortfall," he says.
He expects the budget carrier will review its current pricing structures and fees in the coming months to look for potential price tweaks.
Atkinson adds that in spite of achieving profits Ryanair's business will still suffer over the winter months: "Ryanair attracts the low-price end of the market but this is the area which is being cut back on the most: people aren't going away for quick weekend breaks as much and this will have an effect on the airline."