Member Info for Stupmy

"What specific fare increases did easyJet implement after 2008 fuel surge?"

Response: There is no record of easyJet announcing a simple “we put fares up by £X per ticket” after the 2008 fuel surge; what you can see instead is how much revenue per seat rose, which is the closest disclosed proxy for fare increases.

What the numbers show around 2008

For the year to 30 September 2008, easyJet’s total revenue per seat increased by 12.6% year‑on‑year (7.3% at constant currency), and by 15.2% (9.3% at constant currency) in the second half, when fuel pressure was most acute.​

Management explicitly stated that “over half of the £210 million or £4.08 fuel cost per seat increase [was] recovered through revenue improvements”, i.e., via higher revenue per seat (fares plus ancillaries).​

Aftermath into 2009

A 2009 report notes that higher fuel costs “contributed to a halving of profits at easyJet, although the group increased revenue per seat by more than 4%,” again indicating further yield (fare) increases rather than a fixed surcharge.​

Why you cannot get a single “fare rise” figure

easyJet reports revenue per seat, not a published schedule of fare hikes or a dedicated fuel surcharge line, and part of the uplift comes from ancillaries (bags, card fees, etc.), not just the base ticket.

Contemporary commentary from management talked about recovering fuel costs through “higher fares and charges” and improving yields, but without specifying a uniform per‑ticket increase.

So, historically, after the 2008 fuel surge easyJet lifted revenue per seat by roughly low‑teens percent in FY08 and a further low‑single‑digit percent in 2009, but they did not disclose a precise across‑the‑board fare increase like “£10 per flight”; the effect shows up only as those percentage rises in revenue per seat.

Obviously in the short term let's say till end of 2026, prices are hedged (84% are hedged, at pre war prices). So the figures in the first post are really worst case and the reality would be much easier on ticket prices.

"How have easyJet fares historically responded to fuel cost changes?"

Response: easyJet has tended to absorb fuel spikes in the short term via hedging and margin compression, and only pass them through to fares gradually as hedges roll off and capacity tightens.

Mechanism: hedging first, fares later

easyJet usually hedges a large share of its fuel (around 80%+ of near‑term needs in 2026), which delays the impact of spot fuel spikes on its cost base.

Management consistently signal that when hedges unwind and high fuel prices persist, higher fares become “inevitable”, but with a lag rather than an immediate one‑for‑one pass‑through.

Evidence from past episodes

In the mid‑2000s and 2008 oil spike, easyJet’s fuel bill rose sharply (e.g., +24% fuel cost in one half‑year and +66% on a full‑year basis), and the company explicitly warned that fares would have to rise to cope with higher fuel prices.

At that time, commentary focused on fuel surcharges and higher average fares over the following seasons, rather than instant price jumps on existing bookings. The profit hit in 2008 despite traffic growth shows that not all of the fuel increase was passed through immediately.

Recent behaviour (2022–2026)

During the 2022 energy crisis and the more recent Gulf‑related spike, easyJet stated that high hedge coverage meant current fares would not move much in the near term, but that sustained high fuel prices would “feed in” to fares as existing hedges roll off.

Analysts and industry sources now explicitly link the potential for higher easyJet fares to two conditions: persistently elevated jet fuel and the gradual reduction of hedge cover, not to short‑lived price moves.

Overall pattern

Historically, easyJet treats fuel as a cyclical cost shock it smooths via hedging and yield management, so fare changes tend to be incremental and seasonal rather than mechanically indexed to fuel.

When fuel stays high for long enough that hedges no longer shield costs, easyJet raises average fares (and sometimes relies on ancillary revenues) to restore margins, but usually after an interim period of lower profitability.

Here we go Thumper. The following query given to Perplexity. Sorry I struggled to find price per tonne for fuel in euros, but have price per barrel in dollars. I'm guessing the results are more linked to the change in fuel price rather than the denomination for this query. "Taking easyJet as an example, if the cost of aviation fuel increased 80 to 180 dollars a barrel how much would average fares have to be increased by to offset it?"

Response: Using easyJet’s latest numbers as a guide, an 80 → 180 dollar move in oil (i.e., +100 dollars a barrel) would likely require roughly a 15–25% increase in average fares to fully offset, assuming the shock feeds through to jet fuel and isn’t heavily hedged.

Key steps and numbers

easyJet’s fuel bill is about £2.2–2.25 billion out of total operating costs of roughly £7.9–8.0 billion, so fuel is a bit over 25% of total costs.

Airline fuel cost per seat is about £22, and total cost per seat about £77, from their FY24 results.​

If oil/fuel prices roughly double (which going from 80 to 180 dollars a barrel effectively does), and you assume no extra hedging protection, then fuel cost per seat would also roughly double from about £22 to about £44 (purely as an order‑of‑magnitude estimate).

That adds around £22 per seat in extra cost on top of a baseline £77, i.e., around a 30% increase in total cost per seat.​

Average one‑way fares have been around £65–70 before ancillaries in recent trading updates.

To restore the same margin, fares have to rise enough so that revenue per seat increases at least as fast as the cost per seat. If costs per seat jump about 30% and fuel was only ~25% of the cost base to begin with, raising average fares by something in the high teens to low‑20s percent (say +£10–15 on a £65–70 average ticket) would get you in the right ballpark in a simplified model.

Caveats that change the answer

Hedging: easyJet hedges large portions of its fuel, and the FY24 numbers show fuel cost per seat only moved 1% year on year despite volatile prices, so an 80 → 180 move in spot crude does not hit them 1‑for‑1 immediately.

Fuel vs crude: jet fuel prices don’t track crude exactly; the crack spread and regional premia matter, so the true pass‑through from an 80 → 180 crude move to jet fuel could be more or less than the simple doubling assumed here.​

Mix and ancillaries: easyJet also leans heavily on ancillary revenue (bags, seats, holidays); they could choose to offset some of the shock through those rather than pure fare rises.

So, under a clean, unhedged, “all else equal” assumption: you are looking at roughly a mid‑teens to low‑20s percent uplift in average fares to neutralise an 80 to 180 dollar per barrel move, with any detailed answer needing an explicit fuel‑price‑to‑jet‑fuel and hedge profile to be precise.

It's a problem with AI responses, very long and often very repetitive, but they do seem to represent a useful tool nowadays. I use Perplexity and will try your question with a 100% increase in fuel costs. May also add in a rise in the dollar vs the pound/euro. A point of interest is that for the moment, the dollar has failed to break to upside, but it could do and understanding it's impact on air fares could be interesting.

Bonker/Poker might have a useful take on this type of thing as they have a strong understanding of wider macro-economic type stuff.

It's interesting reading Thumper, to me those changes in ticket costs seem small and perhaps too small to justify the drop in SP, but why did you choose 30% increase in fuel prices. POO is up around 30% but price of aviation fuel has doubled? Does this doubling of fuel costs fall into the analysis of 80 -110 euro cents or above per kg?

I think oil price isn't the right metric, it's jet fuel price (as stated by others this has doubled in price) then factor in the observation that the dollar is currently strengthening against european currencies. That dollar strength could amplify the cost of aviation fuel (which is dollar denominated). Is there anyone here who could give some sort of structure to what the doubling in aviation fuel price might do to the cost of a short haul flight? Also the potential impact of a strengthening dollar? If that is currently moderate then EZJ is likely quite well buffered, but as hedges fall away that situation might change quite a lot?

I find it difficult to imagine there's a rush to buy here. Trump has really made a mess of things with his lack of respect for the US congress and other decision making bodies, his lack of respect and co-ordination with other world leaders and his sociopathy (all linked of course). POO now 111 a barrel (120-130 on the open market I believe) will at some point lead to increases in fares (inflation directly impacting travel) and increased inflation (indirectly hitting consumers discretionary spending) while at the same time the bond market is showing signs of increases in the coupons paid (i.e. interest rates are likely to rise). The way I'm seeing this like a fluster cuck (Trump's way to save the economy). No idea how the US now navigates it's debt interest (lowering interest rates in a strongly inflationary environment will just fan the inflation flames; raising interest rates will make debt difficult to manage for companies and the US government itself). He's sleepwalked into a fight he's very unlikely to win. He's incapable of capitulating (afterall he's now the President of the US, the president of Venezuala, a nobel peace prize recipient, and now the position of Ayatollah would seem to be vacant again). What a guy!

PC/bonker, you guys have a strong grasp of macro-economics, what do you make of this. I can't see a quick fix that will prevent further damage to airlines. EZJ might be better placed that some, but demand for it's services still seem likely to come under pressure.

Despite those thoughts, like a true PI I gave into my FOMO on a little rise yesterday and started to buy. Small for the moment, but I do plan to increase to a more substantial position over time. I do believe though that there is not rush and that I'm likely to be burned a bit in the short term.

I've had not choice about the LTH side of things. Been in for year!!

I think that there is likely a lot of selling on this rise (perhaps not big institutional lumps like in HBR) which is dampening it down. I guess with the slow decline in the SP trapping many in, that selling could dampen the price reaction for a while yet as the POO stays high or even rises. I'm just guessing, but I think that selling is buffering the impact of the rise in price of oil and gas for the moment. Was thinking that when we finally got above 20p, we might see some accelerated upside, but that was apparently sold into immediately.

Thanks, so that implies that those forward curves and your calculations are changeable, but already pricing a substantial fall in prices over the year compared to todays spot price. If I've got that right, then I like the result of your calculations even more than I did at first.

How are they calculated Sekforde? Do the forward price curves hold pretty well over time in situations such as this or do they change quickly as the geopolitical situation changes?

Sekforde, that's if those prices hold for the rest of 2026?

Seems pretty clear to me that market reaction is a result of Viceroy claiming that CBG having knowing understated their exposure to the Motor insurance problem (CBG have disputed that in a level headed way) and the continued market reaction looks likely to be from the RNS today stating that CBG could have to materially increase their provisions (consistent with Viceroys stance) depending up the scope of the FCA's scheme (currently unknown, so a reasonable position from CBG). All hangs on the scope of the FCA's scheme now. Are CBG's provisions enough? No idea, but I'm sure CBG have done everything by the book acording to international accountancy rules and strong governance as they state. All a waiting game. If the FCA's scheme is not too punishing the SP should recover quite quickly.

50p profit, that's not bad for a short holding period. Like you say though Mike, disapointing they didn't hold longer.

What was their base SP on completion of the deal? Around the 220-230's?

MSN who's behind it? Blair/EIG again? Dropping more of their remaining 3.7%

Wish I understood more about price action. The price dropped their to 270 (bit below) on what seems to have been low volume (I went to a single second on the chart). Higher time frames make the volume look larger, but that seems to have been mostly buying after that fast fall. Why would anyone sell with POO over 100 with a good chance of it staying higher for a while. Also how does low volume drop the price by 20p or so?

Hey Liberty. I live very close to Basle, been to Lucerne a few times. To be honest Switzerland is full of beautiful places. Basle itself is a great city and a lot of fun in the summer down by the river. Be happy to meet up if timing allowed it when you come back through.

Why were there two RNS's?

There's a lot of speculation that the USD could strengthen in the near future. As EZJ costs (fuel, aircraft, maintenance) are dollar denominated that would also provid a headwind for profit generation. It has done historically. On the positive side it's hedged 80% its projected dollar costs (not sure for how long; anyone know?) so if the USD were to strengthen, the cost impact on EZJ would take a while to hurt. But with Aviation fuel so high, I'm guessing a rising USD would hurt a lot more than it has in the past.