Ryanair's O'Leary sees 10-20% European fare rise as fuel costs bite

Ryanair group CEO Michael O'Leary has predicted that European air fares could rise by 10-20% over the next 12 months. He called it, in his own words, "potentially the biggest fare increase in European history." The driver, he said, is high jet fuel prices combined with lower fuel hedging rates heading into next year.

The forecast deserves scrutiny, because the data for 2026 so far tells a more restrained story. Jet fuel is averaging around USD150 per barrel in 2026 year to date — a 67% increase on the 2025 average of USD90. Yet the price of passenger air transport has risen by only 2% in the EU and has slipped slightly, by 0.7%, in the UK as of September 2026.

What does this gap mean?

Fuel is an airline's largest controllable cost, and a two-thirds jump in the input price would, in a simple model, push fares sharply upward. The fact that fares have moved by low single digits instead shows that fuel does not pass through to ticket prices automatically. A range of other factors sits in the equation: the state of the wider economy, geopolitics, the balance of supply and demand in the airline industry, and — critically — the details of each carrier's fuel hedging.

Hedging (the practice of fixing fuel prices in advance through financial contracts) explains much of the lag. Airlines that locked in prices before the rally are still buying at rates set in a cheaper market. Those hedges roll off over time. O'Leary's reference to "lower fuel hedging rates going into next year" signals that Ryanair, like its competitors, will re-enter the market for fuel coverage at levels far above the USD90-per-barrel world of 2025.

That is the mechanism behind his 10-20% prediction. The fare increase is not a response to what fuel costs today on the spot market. It is a response to what fuel will cost once current hedge books expire and are replaced at 2026 prices.

Why fares have stayed flat — so far

The 2026 record suggests airlines have absorbed much of the fuel shock rather than pricing it through. A 2% fare rise in the EU against a 67% fuel increase implies carriers have taken the hit on margins, or that competitive pressure — the supply-and-demand balance in the industry — has constrained their ability to raise prices.

O'Leary's forecast is, in effect, a bet that this absorption cannot continue. If hedge rates reset higher across the sector and demand holds, the argument runs, fares must move materially to restore profitability. If demand weakens — through the economic and geopolitical factors that also shape pricing — airlines may find the 10-20% increase difficult to achieve without losing volume.

The claim should be read as one airline CEO's projection, not an observed trend. The evidence to date points the other way: fuel up two-thirds, fares roughly flat. Whether the next 12 months close that gap, as O'Leary expects, will depend on how quickly hedging protections expire across the industry and whether passengers keep paying.