Don’t get over-excited by Jet2-owner Dart (DTG:AIM) saying it will ‘materially’ beat earnings expectations for the year to 31 March 2018 after an end to selling tickets with heavy discounts.

More important is the fact that Dart remains cautious on airline ticket prices. This echoes recent comments by sector peer Ryanair (RYA). As such, share price strength in Dart could be short-lived until it can provide evidence that ticket prices aren’t going to fall again.

The airline sector has been stuck in a vicious price war for some time, placing pressure on the industry and weeding out weaker competitors, including Monarch and Air Berlin.

Dart said on 19 February that it had seen a more normal pricing environment after the heavy discounting in the market over the past year. But the company remains cautious about the pricing outlook.

Earlier this month, Ryanair reported pricing would remain ‘under pressure’ and that it may not be able to push fares higher over the summer.

A lack of confidence in pushing up prices is a problem for the airline industry given recent oil price strength will eventually fed through into higher fuel prices. Airlines will need to find ways to pass on those extra costs to the customer. (LMJ)

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