Holiday prices will crash over the next two years, with flights to Europe hitting rock bottom, the boss of Ryanair has predicted.
Michael O’Leary said the pandemic will herald an era of ultra-cheap European holidays, as airlines look to win back passengers after the three month lockdown.
He said the only way his airline will be able to recover is by slashing fares for the next year or two to encourage air travel.
Rejecting concerns that airlines will raise prices to survive, O’Leary said the opposite was true, though jobs will also suffer.
“The only way we can recover is by setting much lower prices for 12 to 24 months. That’s why we need to cut costs and cut pay,” O’Leary told This is Money.
As long as there is “no massive second wave of the virus”, he predicted heap fares and bargains being offered by resorts, which will ensure passenger numbers will return to pre-crisis levels by next summer.
“The Spanish hoteliers and the Portuguese resorts are offering historically low prices for families in July and August.
“They want to get people back moving again. So travel will never have been cheaper on short-haul around Europe.”
Ryanair kicked off its first flight sale on July 1, as it restarted more than 1,000 flights from the UK to 200 European destinations. More than half a million flights have been reduced – with many down to £18 throughout summer.
It comes as hundreds of pilots face a 20% pay cut, in efforts to prevent 3,000 redundancies.
” These 1,000 daily flights mark an important turning point for Ryanair and for the tourism industry of Europe, which supports so many jobs and small businesses. We, together with our airport partners, are following the health guidelines of EASA and ECDC to ensure that our customers and their families can travel safely while minimising the risk of Covid-19,” O’Leary said, speaking on the sale.
The pilots’ union Balpa said that 96% of its members had voted to accept the temporary 20% pay cut in order to “save jobs that were under threat” due to the collapse in demand for flights in the face of the coronavirus pandemic.
“This is a terrible time for aviation and for employees in all airlines,” Brian Strutton, Balpa’s general secretary said. “It was our members’ mandate for us to save as many jobs as possible. In the circumstances this is the right thing to do even if it means accepting difficult temporary reductions in pay.”
The deal with Ryanair’s pilots saves 260 jobs that were at risk. Ryanair had said a total of 330 pilot jobs were on the line.
Negotiations with cabin crew and other staff continue, lower paid cabin crew have been asked to sacrifice 5% of their pay.
The union said Ryanair had agreed that pay will be restored to 100% over the next four years.
Ryanair’s CEO Eddie Wilson said: ” We welcome this week’s result that 96% of BALPA members have voted in favour of a 4-year agreement on 20% pay cuts and productivity improvements on rosters and flexible working patterns to save the maximum number of UK Pilot jobs.
“The strength of this vote demonstrates the commitment from our pilots in the UK to work with Ryanair as we work our way through this crisis over the next number of years.”
Several airlines have announced plans to cut thousands of jobs, warning it will be several years before passenger numbers return to normal levels.
Budget airline easyJet is preparing to axe 4,500 staff and permanently close three major UK airport bases, while British Airways has warned 12,000 jobs are at risk.