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Sunglasses? Check. Seat back in the upright position? Check. Poised to open the throttle? Cross-checked. EasyJet is the latest European airline to report decent bookings. Slowing economies and unsteady geopolitics are so far no impediment to the industry having a rather good summer.
Sun lovers and airlines alike suffer through Europe’s winter months, longing for better weather and more lucrative travel opportunities. On Monday, Ryanair was cautiously optimistic, pointing to strong demand and a pick-up in fares over the coming months. On Thursday, easyJet reported bookings for the current and next quarter ahead of last year’s levels.
Flag carriers — including British Airways owner IAG, Air France-KLM and Lufthansa — have also recently reported similarly strong-looking summer seasons. Almost 90 per cent of flyers rank summer travel as their top discretionary spend, according to easyJet’s latest passenger survey, up from 77 per cent last year.
Much is going the airlines’ way, notwithstanding the turbulence briefly caused by April’s US tariff-related traumas. Economic growth is slowing, but only gradually. Lower interest rates and falling oil prices help curb costs.
Even negatives can be somewhat positive. Top-line growth is limited to some extent because of delivery delays from Airbus and Boeing — something all are griping about. Ryanair expects passenger numbers to rise only 3 per cent in its current financial year because it simply has no extra seats. But with no planes to spare, rivals cannot launch market-share raids by adding cut-price routes — something Europeans have a history of doing, unlike their generally more disciplined US peers.
Airlines’ share prices relative to forecast earnings have recovered from their April lows on both sides of the Atlantic. All the biggest players are trading ahead of their averages for the past two years, suggesting investors, too, have some degree of confidence in the outlook.
Time to reapply the SPF 50 and pour another cocktail? That’s not how the airline industry works; executives are never free from worry. While European carriers have maintained their full-year financial forecasts despite tariff-related uncertainties, unlike most of their US peers, all have recently acknowledged that things could change swiftly. Tariffs are paused, not dropped, for example.
One small fly in the sangria: a recent Spanish court ruling that would essentially block low-cost carriers from charging for cabin baggage. Ryanair chief Michael O’Leary called the decision “dumb regulation”, while easyJet boss Kenton Jarvis described it as “consumer unfriendly.” Both are big users of such ancillary fees to boost revenue.
The low-cost carriers are confident this contravenes EU law and will ultimately be overturned. Summer will be long gone before the outcome is known. In the meantime, airline bosses can rely on fair weather, if not with total confidence, then at least as much as any British holiday-maker.