EasyJet fares may rise with fuel prices
EasyJet says it will raise ticket prices if the cost of oil does not fall, after posting that first-half pre-tax losses have trebled to £57m, compared with £17.1m a year earlier. Chief executive Andy Harrison says the soaring price of fuel spells the end for some low cost carriers.
Harrison says the company will increase one way fares – which average around £50 – by almost 10% if fuel costs do not come down. It has previously levied a number of optional charges for items and services including luggage and priority boarding to balance out fuel costs.
“Fuel prices are 80% higher than a year ago,” he says. “If that is sustained then some of these [budget] airlines will disappear, that is inevitable and that will mean that fares will inevitably rise through competitive factors.”
There are around 70 small airlines in Europe that account for 50% of short-haul traffic, according to Harrison. “Most of these airlins are flying planes that are more than 15 years old. They were uneconomic when oil was $70 a barrel, they are certainly uneconomic at $120 a barrel.”
EasyJet’s fuel bill rose 24% in the six months to March 31 to £264m, equivalent to 28% of the company’s total cost base.
However, the Luton-based airline says it traditionally makes its money in the second half of the year. EasyJet has already taken 40% of its second half bookings, slightly ahead of last year. It says its underlying business is strong and it can survive the rough patch in the airline sector which has seen half a dozen carriers go under.