Ryanair CEO Warns European Fares Could Jump 20% on Iran War Fuel Costs

Ryanair CEO Michael O'Leary says European airfares could rise 10%, and possibly 20%, next year as the Iran war drives jet fuel costs sharply higher. He made the comments on CNBC on Monday, November 2, after the carrier's fiscal second-quarter earnings call.

Ryanair, Europe's largest airline by passenger traffic, expects its annual fuel bill to climb by roughly 2 billion euros for the fiscal year ending March 2028. O'Leary said fares would need to rise 20% — about 10 euros per passenger — to cover the full increase. Even that might not be enough, he conceded.

Why is fuel suddenly so expensive?

The Iran war, now in its ninth month, has disrupted global supply chains and effectively closed the Strait of Hormuz, through which about 20% of the world's oil passed before the conflict. Brent crude stood around $110 per barrel on Monday, up 70% from a year ago.

Fuel is the airline industry's second-biggest expense behind labor, and the squeeze is already showing up on both sides of the Atlantic. U.S. airfares rose 22.4% in September compared with a year earlier, according to the Bureau of Labor Statistics — roughly six times the overall inflation rate. The average domestic U.S. airfare hit $445 in the second quarter, per the Bureau of Transportation Statistics.

Unlike Ryanair, major U.S. carriers abandoned fuel hedging years ago, which leaves them more immediately exposed to surging prices.

How protected is Ryanair?

Ryanair has hedged 80% of its fuel needs through March 2027 at $67 per barrel, keeping costs in check for now. Beyond that window, only 25% of its fuel needs for the following fiscal year are hedged, at roughly $95 per barrel — leaving the rest exposed to market prices well above that level.

To close the gap, the company said it is reviewing costs, including temporary pay freezes for labor agreements that mature in April and lower crew ratios.

Will there be fewer flights?

Yes, likely. Ryanair has already cut its annual passenger target from 216 million to 214 million for the fiscal year ending in March, and it expects winter traffic to stay flat as it limits exposure to more expensive fuel. O'Leary said competing European airlines are already trimming capacity, which could push prices higher as travelers compete for fewer seats.

The math for multi-city travelers adds up quickly. A 50 euro flight that rises 20% costs 60 euros — modest on its own, but the total grows fast with multiple family members and destinations.

Does higher fuel actually help Ryanair?

Possibly. O'Leary argued that rivals under greater financial pressure will have little choice but to raise fares, letting Ryanair do the same while keeping its low-cost edge. "They are under much more pressure to get pricing up," he said during the earnings call. He added that Ryanair could maintain or even widen its margins as competitors lift prices.

What's the backdrop for travelers?

Nearly 24 million Americans traveled to Europe in 2025, a 5% increase from the previous year, according to figures cited by Fortune. Europe's aviation network handled an average of 35,959 flights per day between June and August this year, up 2.4% from last summer, according to the European Organisation for the Safety of Air Navigation.

Those travelers now face a market where the continent's famously cheap short-haul flights may carry a war premium. O'Leary's advice to anyone hoping to wait out next summer for a bargain: don't. "I would encourage them all to book early, because the longer you wait, the higher fare you are going to pay," he said.