High fuel prices could push up ticket prices and force airlines to cut capacity as their hedging contracts expire.

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BRUSSELS — High jet fuel prices could trigger “the biggest increase in airfares, I would say, in history in Europe” next year, Ryanair CEO Michael O'Leary told reporters Tuesday.

If fuel prices remain twice as high as before the U.S. war against Iran, O'Leary warned ticket prices could rise by up to 20%.

Hedging contracts have locked in fuel prices for much of airlines' consumption so far. This has helped European carriers avoid sharp ticket price increases, despite jet fuel prices more than doubling following disruptions to shipping through the Strait of Hormuz since the war in the Middle East began.

But O'Leary said most European airlines lack significant hedging next year. “As we go out into next year, we're only 15% hedged at $85 a barrel. Basically, we're unhedged into the summer of 2027,” O'Leary told POLITICO in an interview ahead of a press conference in Brussels.

Ryanair's hedging contracts expire in April 2027. “We will still be profitable, although less profitable than currently, if oil prices remain high,” he said.

O'Leary warned that fewer available seats and higher fares could become the new normal as more airlines face financial struggles. “You're going to see dramatically less capacity this winter and into the summer of 2027.”

Ryanair itself is cutting 20 routes from Belgium this winter as a response to an increase in national aviation taxes, from €2 in 2025 to €7 from January.

The fuel price hike is also intensifying the airline sector's opposition to EU climate policies, which many carriers argue are adding to their already rising operating costs.

Ryanair had long advocated extending the EU's Emissions Trading System to all flights to and from the EU, a call O'Leary reiterated on Tuesday.

“It’s indefensible that … Europe's citizens are paying all these environmental taxes, while the Yanks, the Asians and the Chinese land and take off in Europe completely exempt from their fair share of environmental taxes.” He added that Ryanair would pay €1.5 billion in ETS compliance costs in 2026.

He argued that the ETS should also cover long-haul services operated by European rivals such as Lufthansa and Air France-KLM.

“And why not? Those are the most expensive flights in the world. They're also the most profitable flights they have, because they're exempt from Europe's bullshit environmental taxation,” O’Leary said.

The EU currently applies the ETS to aviation emissions from flights within the European Economic Area, as well as flights to Switzerland and the U.K. The European Commission proposed last summer to extend carbon pricing, starting in 2029, to flights departing the EU for destinations within 5,000 kilometers of Frankfurt Airport, including to North Africa and the Middle East.

The proposal would affect Ryanair's flights to destinations such as Morocco, while continuing to exempt most long-haul services operated by other airlines to more distant destinations like the U.S. and China.

The low-cost airline is facing allegations that it violates EU requirements for operating in the bloc.

The probe focuses on the period from 2009 to 2019, when Verhofstadt chaired the ALDE group in the European Parliament.

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