Airfares look increasingly likely to rise further as the US-Iran war unsettles energy markets, with Lufthansa saying on Tuesday that its fuel costs for 2026 will be 2 billion euros higher than last year and Ryanair’s chief executive warning of fare increases of up to 20 per cent next year.
The German airline group expects its total fuel bill for the year to reach 9.3 billion euros, 600 million euros more than previously estimated. Ryanair’s Michael O’Leary told CNBC in recent days that significant new fare rises of up to 20 per cent could follow next year.
Major airlines have highlighted rising fuel costs in recent days, saying further fare increases will be unavoidable unless there is a positive development in the war. European carriers have already warned that higher jet fuel costs caused by the war in the Middle East are expected to weigh further on their financial outlook.
Fares are also expected to rise next year as the hedging contracts airlines took out to protect themselves against swings in fuel prices gradually expire, according to Reuters.
Costs passed on to passengers
Maria Kouroupi, director of aviation development and communications at Hermes Airports, told Sigma on Tuesday that prices were set by demand, supply and competition, but that higher costs for airlines could lead to part of the burden gradually being passed on to passengers.
So far, she said, the pressure appeared to have been partly absorbed by the market’s performance, as air travel in Europe was growing.
Passengers who have seen fares climb over the past year are looking for the cheapest options, in some cases changing planes up to twice to reach their destination.
Fares already up
Fares have already risen by more than 39 per cent in some cases, and by close to 50 per cent compared with two years ago.
Cirium, a data company specialising in aviation, recently analysed fare increases since the war began in February and found that low-cost airlines had recorded the biggest rise in economy class. Their fares are 39.20 per cent higher than in May 2025 and have more than doubled since the start of 2024.
For Europe’s three big airline groups, Lufthansa, IAG and Air France-KLM, fares are 48.41 per cent higher than at the start of 2024.
Fuel bills
US and Israeli strikes on Iran began around the end of February and, despite early predictions that they would last a few weeks, have continued for about eight months, unsettling international oil markets.
That hits airlines hard, as fuel is their biggest or one of their biggest operating expenses, at 25 to 30 per cent of total operating costs. During energy crises, that share can climb above 31 to 35 per cent.
