European air fares may increase by up to 20% in 2027 due to rising jet fuel costs linked to the conflict in the Middle East, according to Ryanair CEO Michael O’Leary. He cautioned that the heightened operating expenses could lead some airlines into financial trouble, potentially resulting in bankruptcies and industry consolidation.
O’Leary predicts that ticket prices will rise sharply over the next year as airlines face escalating fuel costs, a significant expense that can drastically affect profitability. Currently, Ryanair has safeguarded around 80% of its 2026 fuel needs through hedging contracts at $67 per barrel. However, for 2027, the airline has only hedged 15% of its fuel requirements at $85 per barrel, exposing much of its future consumption to market fluctuations.
Other European airlines are also vulnerable to potential fuel price hikes. EasyJet, for instance, has noted increasing fuel expenses and plans to cut its winter schedule to reduce costs. The airline has secured partial fuel-price protection for the first and second halves of 2027.
In response to rising costs, Ryanair is scaling back its operations in Belgium, eliminating 20 routes and over a million seats from its winter schedule. This decision comes ahead of a planned hike in the country’s aviation tax from €2 to €7 in January.
The forecast presents challenges for both airlines and travelers. While carriers might increase ticket prices to counterbalance the higher costs, there is uncertainty regarding how long consumers will bear the burden of more expensive air travel.