Ryanair to cut winter fares by five per cent

After initially signalling that it would raise airfares during the upcoming winter season, Ryanair has now announced that it will reduce fares by five per cent, amid concerns that passengers would be turned away by higher prices in this bleak economic period.

The average fare for flying with Europe’s largest low-cost carrier will drop from €42 to approximately €40, reversing the earlier plan to raise fares by €2. Ryanair’s deputy chief executive officer, Howard Millar, confirmed that the company’s sales outlook had worsened since the previous announcement by CEO Michael O’Leary that fares would be likely to rise.

“The UK and Ireland seem to be going into a fairly strong recession and we now estimate that yields [average fare] will fall 5%,” noted Millar. He added that the priority for the airline was to maintain its load factor – which means seats sold per flight. Under the budget carrier business model, low fares are offered in order to increase ticket sales. Profits then come from supplementary charges, including baggage check fees and car rental deals, for example.

News of fare decrease came as Ryanair shocked the market with an unexpected 85 per cent drop in its first quarter profits. It warned that it could post a loss for the full financial year.

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