Ready for take-off?
15 September 2021
While he’s something of a Marmite character, there’s no denying that Michael O’Leary, Ryanair’s chief executive, is a shrewd businessman with forthright views.
So it was significant that the airline boss was widely reported recently predicting that fares will rise sharply next summer and that demand for holidays will surge in the wake of the pandemic.
O’Leary believes that associated costs like hotel accommodation will also take off. He says the situation will be fuelled by less capacity being available because some operators reduced their capacity during the lockdown.
It’s a classic case of rising demand, reduced supply and, consequently, an inevitable rise in prices. Are there parallels here with the hire industry?
Hirers have been reporting record levels of demand, suppliers can’t keep up, materials are in short supply and so prices of products and services are climbing.
Moreover, inflation is rising and analysts are unsure as to how rapidly it will descend. The Government’s eyebrow-raising announcement last week that National Insurance rates will rise next year by 1.25% for both employees and employers to pay for social care costs means overheads will go up.
Surely there are implications here for hire rates, especially as other financial pressures have already been added into the economy. The March budget announced increases in corporation tax, and personal tax allowance levels have been frozen from next April.
This means that many costs associated with employing people, buying equipment and doing business generally will continue to rise – not just the price of air travel and summer holidays.
So what’s your strategy to cope? Will hirers need to examine their hire rates to ensure they cover the likely cost increases?
Picture: William Hook/Unsplash