The boss of Ryanair has predicted “significant economic damage” for the UK once Brexit is enacted, with air fares set to rise considerably as airlines pull out of the country.
Speaking at the launch of the airline’s summer 2017 programme in London last week, Michael O’Leary (below) admitted fares would likely fall in the immediate future as prices are reduced in order to stimulate sales, after the EU referendum prompted steep falls in the value of sterling against the dollar and euro.
However, he insisted the reduction in price would be short-lived.
“There’ll be a bunch of halfwits out there going: ‘Great, fares are getting cheaper,’ but as fares get cheaper more aircraft will be moved away from the UK in the next two or three years,” he said.
Ryanair has downgraded its own UK traffic growth predictions from 15% this year to 6% in 2017, meaning it will carry a total of 44.5 million passengers into or out of the UK next year instead of the anticipated 50 million.
The airline will also relocate 10 of its aircraft, which it had planned to base in the UK, to other European bases.
It is this, O’Leary said, that will lead to prices ultimately rising, as consumers are left with fewer choices. He predicted though, that this would be the tip of the iceberg for the UK economy.
“The UK is going to suffer some significant economic damage when we get into the entrails of the Brexit decision.
“We hope the UK does well out of it, but I’d be very concerned,” he added.
Elsewhere, he warned that the impact of a Brexit on the aviation sector still remained largely unknown. While the US-EU open skies agreement might be retained by the UK, O’Leary said there were potential issues regarding how Brexit would impact European routes.
Under current laws, an airline based in an EU country has the right to fly anywhere in Europe, as long as it is majority-owned by EU shareholders.
However, O’Leary said there was confusion as to what this would mean for airlines in which UK shareholders own significant stakes.
“[European airlines] must be 50.1% owned by EU shareholders and we have about 20% UK shareholders,”
O’Leary said, [meaning if the UK leaves the EU it will have less than 50% European shareholders].
“Flight routes are only one issue but it is the share holding [problem] that is much bigger and nobody has a clue.”
Leaving Brexit aside, O’Leary noted one positive on the horizon – the continued low price of oil, which should save the airline around €150 million next year. “That will be passed on in lower fares, which is why most of the other airlines are struggling to compete with us,” he added.