Ryanair warns of fare hikes in 2027, considers staff pay freeze amid Iran war

# Ryanair Warns of Double-Digit Fare Hikes as Iran War Drives Up Fuel Costs

Ryanair is considering a temporary wage freeze for employees and has warned that airfares across Europe could rise significantly next summer as the war in Iran pushes aviation fuel prices higher. The airline expects fuel costs to remain elevated well into 2027 unless the conflict reaches a swift resolution.

The budget carrier estimates that its fuel bill could increase by approximately $2.24 billion in the short term. Chief Executive Officer Michael O’Leary said the additional expense would put pressure on ticket prices, with airlines likely to introduce double-digit fare increases to offset rising operating costs.

However, higher fares may not fully compensate for the increase in fuel expenditure. Ryanair is therefore considering temporary pay freezes as another way to manage its costs.

The airline reported a 16% decline in pre-tax profits for the six months ending in September, largely attributed to a 15% increase in fuel costs. The figures highlight the financial pressure facing carriers as geopolitical instability affects the aviation industry.

## Fuel Hedging Offers Only Partial Protection

Ryanair said it had hedged approximately 80% of its fuel requirements, meaning it had secured much of its supply in advance at predetermined prices. However, the remaining portion of its fuel needs is exposed to higher market prices, leaving the airline vulnerable to continued increases.

Based on its forecasts, O’Leary said Ryanair would need fares to rise by around 20% to cover the additional jet fuel costs fully. He acknowledged that such an increase might not materialize but expected double-digit fare increases across European airlines in 2027.

Aviation fuel prices have risen amid the U.S.-Israel war with Iran, which has disrupted supplies of refined petroleum products from the Gulf and intensified competition for fuel from alternative sources.

The impact extends beyond Ryanair, with higher fuel expenses threatening profit margins across the airline industry. Carriers may respond through a combination of fare increases, capacity reductions and tighter cost controls.

## Temporary Pay Freeze Under Consideration

Ryanair is also examining a temporary wage freeze as existing multi-year labor agreements with unions approach their expiration dates. The measure could take effect from April 2027.

Alongside its labor-cost plans, the airline intends to expand its use of artificial intelligence in back-office and support operations, potentially helping streamline administrative work and improve efficiency.

The combination of higher fuel costs and pressure on profitability is prompting Ryanair to reconsider several aspects of its operating strategy as it prepares for another challenging year.

## Flight Reductions Could Continue Into 2027

Ryanair has already reduced some winter flights and warned that additional cuts may follow. According to O’Leary, the pressure is affecting the broader aviation industry, particularly short-haul airlines that operate on tight margins.

The company expects capacity reductions to continue into the summer of 2027. O’Leary also predicted that short-haul capacity could remain constrained into the early 2030s, reflecting longer-term challenges facing the sector.

Reduced capacity, combined with higher fuel expenses, could limit the availability of low-cost tickets and make travel more expensive for passengers across Europe.

Earlier this year, O’Leary predicted that travelers could face the largest increase in European airfares in history during 2027. His latest remarks reinforce the airline's warning that geopolitical developments and fuel-market uncertainty could significantly affect the cost of flying.

For passengers, the outlook points to potentially higher ticket prices next summer. For airlines, the challenge will be balancing rising expenses, workforce costs and operational capacity while maintaining profitability in an increasingly uncertain market.