What is going on with summer holiday and flight prices?

There was much to pore over in Ryanair’s latest financial results announcement.

Eye-catching of course was news that the airline is in talks with its high-profile chief executive, Michael O’Leary, about staying on until 2032.

This was no huge surprise, given Mr O’Leary’s huge stage presence and impressive results.

As it announced full-year results on Monday, Ryanair revealed: “This spring, the board commenced discussions with Michael O’Leary on an extension of his employment contract with the group - currently ends 2028 - until April 2032.

“These discussions have almost concluded and engagement with the group’s largest institutional shareholders will commence in the coming days.”

Dan Coatsworth, head of markets at stockbroker AJ Bell, highlighted his belief that a four-year extension to Mr O’Leary’s contract would receive a broad welcome among major Ryanair shareholders.

Mr Coatsworth said: “Ryanair is now set to discuss leadership with its biggest shareholders, and it is hard to imagine any would object to O’Leary staying on longer. He has been the driving force behind significant strategic progress, keeping a lid on costs while continuously finding new ways to earn from customers.”

Mr O’Leary has indeed found “new ways to earn from customers”, continuously.

That said, this has enabled Ryanair’s profitability and growth and allowed many people to undertake trips they might otherwise have been unable to make, with the connectivity and fares the budget airline has brought to the market.

It was interesting, as well, to hear what Ryanair had to say on Monday about the pricing of its flights recently, amid the Middle East conflict.

Ryanair highlighted its “cost advantage” over some other airlines in Europe in terms of having 80% of its jet fuel for the year to March 2027 hedged, at a time when spot prices for this commodity have been pushed sharply higher by the conflict in the Middle East and the closure of the Strait of Hormuz.

It also declared that Europe remains “relatively well supplied” with jet fuel, which you would imagine will be music to the ears of those with summer holiday plans.

Ryanair said: “The conflict in the Middle East has created economic uncertainty and we still don’t know when the Strait of Hormuz will reopen. Despite this, Europe remains relatively well supplied with jet fuel, with significant volumes sourced from West Africa, the Americas and Norway. 

“Global jet-fuel spot prices have, however, spiked to over $150bbl (per barrel) and are expected to remain elevated versus pre-conflict levels for some months.  Ryanair’s conservative jet-fuel hedging strategy - 80% of FY27 (full year 2027) jet fuel is hedged at approx. $67bbl - to April 2027 - will insulate group earnings in the current very volatile oil markets and widen the cost advantage over EU competitors for the remainder of FY27.”

However, Ryanair did highlight cost pressures.

It said: “Our EU enviro. (environmental) taxes are expected to rise by a further €300m this year to [circa] €1.4bn, which makes EU air travel even less competitive.” 

And the airline noted that, on the jet-fuel front, the price of its “unhedged 20% has spiked due to the Middle East conflict”.

Looking at the other side of the pricing equation, Ryanair described demand for travel as “robust”.

That said, the airline also highlighted the fact that people are booking closer to their travel dates amid the fall-out from the Middle East conflict.

This is something that was also flagged by package holiday giant and airline TUI only last week.

TUI said: “Bookings are impacted by the Iran war, which has led to a shift in demand from Eastern to Western Mediterranean destinations, with customers demonstrating increased caution and booking closer to departure dates. Recent research also indicates that whilst summer holidays remain a top priority, 45% of consumers planning a holiday are yet to book this season, a level which is unchanged since March. Of these consumers, 38% are expected to book between August and October.”

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It noted that, “as a result, booked revenue is at -7%, in what generally remains a competitive market environment”, comparing summer 2026 with summer 2025.

And TUI observed, on the same time comparison, that “by market, booked revenue in our two key markets stands at -10% in UK and at -3% in Germany”.

Ryanair, for its part, said on Monday: “To date, [summer] 26 travel demand remains robust although bookings are closer-in than last year, reducing visibility. Pricing in recent weeks has eased somewhat in response to economic uncertainty caused by higher oil prices, the fear of fuel shortages and the risk of inflation adversely impacting consumer spending.”

This easing of pricing is interesting, although perhaps not surprising.

Both airlines and consumers are facing rising costs.

Mr Coatsworth said of Ryanair: “Under normal circumstances, Ryanair would respond to cost pressures by putting up fares and passenger charges, but the market environment is currently too fragile to go down that road. Consumers are spooked by oil prices shooting up since March and remaining relatively high. It’s made the cost of living go up, and that drives more caution towards spending. 

“Airlines and holiday companies are having to drop prices, or at best keep them level, just to keep demand ticking over. If cost pressures remain intense, they will have no choice but to put prices up. Fortunately, Ryanair has a strong enough balance sheet to weather any storms.”

Package holiday and airline group Jet2, issuing a trading update on April 29, also highlighted the impact of the conflict in the Middle East on customer booking patterns.

Jet2 said: “On-sale capacity for summer 2026 is currently 7.7% higher than summer 2025, at 19.9m seats. Booked to date passengers are up by 6.2% with both package holidays and flight-only showing positive growth. Since commencement of the conflict in the Middle East, the booking profile has become increasingly close to departure.”

The airline flagged limited visibility on peak summer bookings and beyond as it spelled out its strategy on pricing.

Jet2 said: “At present, Q1 (April, May, June) combined average load factor is in line with the prior year, with the current geopolitical uncertainty limiting visibility for the peak summer season and beyond. As previously stated, we continue to invest in load factor and remain fully committed to pricing that is attractive and represents real value to our customers.”

There seems to be a clear recognition on the part of the airlines and holiday companies of the pressure not only on their costs but on the household budgets of their customers.

It will be interesting to see how it all shapes up for the travel operators and consumers alike, as we head fast towards the peak summer season.

Hopefully, it will be a case of riding out the short-term turbulence, with those desperate to go on holiday able to do so, and connectivity and capacity preserved for future seasons. Such an outcome would be to the benefit of all parties with a stake in this, including those employed in the overseas travel sector and airports as well as consumers and the airlines and holiday companies.