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The cost of flying is rising, and these holiday favourites will go up the most

Madeira, Portugal
Flying to places such as Madeira could become 'something for the rich and privileged' as airlines face jet fuel tax rises - Stone RF/Getty

Flying will become “something for the rich and privileged” as airlines face significant tax rises on jet fuel, according to Jet2’s boss, with some destinations set to get more expensive than others.

Speaking at the Jet2holidays conference in Turkey this week, Steve Heapy, the chief executive of Jet2, said that the aviation sector produces less carbon dioxide than other industries, including meat production, yet airlines have to pay more in carbon taxes.

For decades, a tax exemption on jet fuel has enabled airlines operating in the UK and the EU to keep prices artificially low. Now, a growing list of environmentally charged levies are being placed on aviation as governments work towards 2050 net zero targets.

So what exactly is about to change, and which destinations are set to become more expensive?

Carbon permits and a ‘massive’ tax hike

Under the UK’s emissions trading scheme (ETS), the cost for a permit per tonne of carbon dioxide had risen by a factor of almost 16 in just five years. Heapy said that Jet2 omits approximately 2.2 million tonnes of CO2 per year. In 2018, the permit cost £5 per tonne. Today, that has risen to £78 per tonne, he said.

The aviation industry may have been subject to tax waivers on jet fuel until now, but this could be about to change: Heapy warned that the rolling out of a “massive” EU-wide tax on jet fuel could mean higher ticket prices for the consumer.

“Imagine your tax rate went up to 70 per cent – that’s what’s going to happen with jet fuel,” he warned this week.

Madeira, Portugal
'Ryanair intends to downsize one of its two Madeira-based planes,' says Michael O’Leary, chief executive of Ryanair - Robert Harding World Imagery

The rise in flight tickets is already happening and there are many factors at play, including rejuvenated demand for travel after the pandemic, airlines recouping lost earnings, an increase in air passenger duty (APD), and a spike in the cost of oil following Russia’s invasion of Ukraine and, more recently, the war in the Middle East.

Change is already underway. Earlier this year, easyJet revealed that its average fares (from January to March, 2023) were up 31 per cent year-on-year. Johan Lundgren, the chief executive of the low-cost airline, said the rise was down to significant cost increases, notably the price of jet fuel. Ryanair’s fees increased by 20 per cent in 2022, and jumped by another 15 per cent in 2023.

Ryanair to slim down Portugal routes

Heapy’s words come just days after Ryanair said it would be reducing its services from the UK to a number of destinations in Portugal, due to increased airport charges.

“We have recently been victims of the ANA/Vinci monopoly, which has extraordinarily increased airport charges for next year,” said Michael O’Leary, the chief executive of Ryanair. ANA Aeroportos de Portugal manages 10 Portuguese airports.

Ryanair closed its base in Ponta Delgada in the Azores this winter for this reason, and warned that there could be a further reduction in services to Portugal on the horizon.

“If ANA continues with these latest monopoly price increases to 2024, then Ryanair intends to downsize one of its two Madeira-based planes and significantly reduce our schedules to and from Faro and Porto for summer 2024,” O’Leary said.

Miradouro da Vista do Rei, Portugal
Ryanair has announced plans to slim down routes to destinations including Portugal - Moment RF/Getty

Portugal is set to increase its airport fees by an average of 14.6 per cent in 2024, amounting to approximately €1.60 (£1.38) per passenger, per flight. This, O’Leary said, would “harm Portugal’s competitiveness” and “crowd out much-needed tourism growth”.

Madeira could face a double hit. Because it is in the outer regions of the EU, it has always been exempt from the EU’s Emission Trading Scheme charge. However, this exemption is due to be removed by January 1, 2024 (when flying in from other EU member states), which will likely lead to higher ticket prices. The Canary Islands will also be affected by this change. Heapy predicts this could increase the cost of flying to these destinations by £25.

The dawning of ‘green fuel’

The introduction of Sustainable Aviation Fuel (SAF) could contribute to a rise in the cost of flying. The topic was in the news this week, when Virgin made its first transatlantic flight using the jet fuel alternative.

Willie Walsh, director general of IATA and a former chief executive of British Airways, said: “It will mean higher fares, because sustainable aviation fuel is more expensive than your traditional jet kerosene. And as we transition to net zero, it is going to cost some money.”

airplane
Flying could become more expensive following the introduction of Sustainable Aviation Fuel (SAF) - Getty/E+

There are additional concerns regarding the scalability of SAF, with suggestions that it could never be applied to more than a limited number of flights.

The rise of airline ticket prices will have an impact not just on the tourist’s pocket, but on the destination itself. A 2022 Deloitte report entitled “Flying Towards a sustainable future” predicted that, for Spain, the emerging suite of aviation taxation measures could mean a loss of up to 11 million international tourists per year.

There are certain destinations that already cost more to reach.

Based on the average ticket price between 2017 and 2022, the cost of flying from the UK to Istanbul has risen by 69.4 per cent, according to OAG data. Other cities to have seen significant rises include Amsterdam (31.1 per cent), Rome (33.3 per cent) and Santander (60.9 per cent).

The overall cost of package holidays is on the up, too. A Which? comparison of average prices for package holidays in six popular destinations revealed that a week’s break in 2023 increased by an average of 30 per cent year-on-year  – to £867 per person. A seven-night trip to Italy cost £616.68 per person on average last year. This year, the same trip would cost £757.53 – an increase of 23 per cent.