2nd November 2026
The prospect of an overseas holiday becoming considerably more expensive is growing as the travel industry faces a combination of rising costs. While much of the attention has focused on the dramatic increase in aviation fuel prices and warnings from airlines such as Ryanair, the problem extends far beyond the cost of getting on an aircraft.
Hotels, restaurants, car hire companies, transfer operators and tourist attractions are all exposed to rising energy, transport, food and staffing costs. Even the cost of travel insurance and the value of the pound against the euro can make a noticeable difference to the final bill.
For British families already dealing with higher household bills, the possibility of another significant increase in holiday costs could mean reconsidering where they go, how long they stay and whether they can afford an overseas holiday at all.
The concern is that several separate increases could arrive together, making the overall cost of a holiday considerably higher in 2027.
Jet fuel is at the centre of the problem
The immediate pressure comes from aviation fuel, which has become substantially more expensive following the continuing conflict in the Middle East and disruption to oil supplies.
The International Air Transport Association (IATA) has highlighted how fuel has become an increasingly large proportion of airline operating costs. Its estimates put fuel at around 31% of airline expenses in 2026, compared with approximately 24% in 2019.
This is a significant change for an industry which already operates with relatively tight profit margins.
Ryanair chief executive Michael O'Leary has warned that European short-haul air fares could increase by 10% to 20% during 2027 if fuel prices remain elevated.
The company's latest results, published on 2 November, illustrate the problem. Ryanair reported a 15% fall in half-year profit after tax to €2.15 billion, despite carrying more passengers.
Its unhedged jet fuel costs have approximately doubled to $130 per barrel. Although the airline has protected much of its immediate fuel requirements through advance purchasing arrangements, its protection becomes considerably smaller during the following financial year.
Ryanair estimates that its fuel bill could increase by approximately €2 billion in the year ending March 2028.
Other airlines face similar problems. Some have secured more of their fuel requirements in advance, while others are exposed to current market prices.
Jet2, for example, has reported substantial fuel protection through March 2027, while TUI has hedged a smaller proportion of its summer 2027 requirements.
This means that airlines will not all experience the increases at the same time.
However, the general direction is clear. If fuel remains expensive, passengers are likely to pay more, while airlines may also reduce the number of flights they operate.
Could flights be cancelled or routes disappear?
Higher prices are not necessarily the only problem for passengers.
Airlines may decide that some routes are no longer sufficiently profitable, particularly where demand is weaker or operating costs are relatively high.
Ryanair has already been reviewing its route network and costs, while easyJet has announced reductions in some winter capacity.
There is also a difference between commercial decisions to reduce flights and cancellations caused by an actual shortage of aviation fuel.
The latter remains a potential risk if disruption to supplies continues. However, expensive fuel does not automatically mean aircraft will be grounded.
For British travellers, the consequences could be particularly noticeable at regional airports. If airlines concentrate their aircraft on larger and busier routes, smaller airports may lose services or see fewer flights.
That matters in Scotland, where people living in the Highlands and Islands have fewer alternatives when air services are reduced.
A flight from Inverness or another regional airport is not simply a convenient alternative to travelling from a major English airport. It can save considerable time and additional road or rail costs.
If services disappear, passengers may have to travel further before even beginning their holiday.
The cost of accommodation could rise too
Air fares are only the beginning. Once passengers reach their destination, they face another collection of businesses dealing with higher operating costs.
Hotels are particularly exposed to energy prices. They need electricity for air conditioning, lighting, refrigeration, laundry facilities, kitchens and swimming pools. In Mediterranean destinations, air conditioning is an important part of the holiday experience, particularly during the hottest months.
Hotels also have to pay for food, cleaning materials, maintenance, transport and staff.
Large hotel groups may be able to negotiate better prices with suppliers, but smaller independent hotels and family-run establishments often have less financial flexibility.
If their operating costs increase, they have three choices: absorb the increases and accept lower profits, reduce services or charge guests more.
Many will inevitably choose a combination of all three.
There is also a potential problem with the timing of price increases. Hotels and tour operators negotiate contracts months in advance, so the full effect of higher energy and transport costs may not appear immediately.
Restaurants and food prices add another layer
Eating out is an important part of most overseas holidays, but restaurants face many of the same pressures as households.
Food prices are affected by transport, refrigeration, storage, fertiliser, agricultural production and energy costs.
Restaurants also need electricity or gas for cooking, refrigeration and other equipment. They have wages, rent, insurance and delivery costs to consider.
If these expenses rise, customers are likely to see the consequences in menu prices.
This could be particularly noticeable in popular tourist destinations where restaurants already operate with high seasonal demand.
Even people staying in self-catering apartments may not escape the increases. They will still have to buy food from local supermarkets, where imported goods and transport costs can influence prices.
All-inclusive holidays may offer some protection against unexpected spending once abroad, but the initial package price could increase as hotels renegotiate their contracts with tour operators.
Car hire, petrol and local transport
Another expense which can easily be overlooked when budgeting for a holiday is transport after arrival.
Car hire companies face vehicle purchase costs, servicing, maintenance, insurance and depreciation. Higher fuel prices also affect their operating expenses.
Holidaymakers hiring a car in Spain, Portugal, Greece or elsewhere may therefore face higher rental charges as well as more expensive petrol or diesel.
Airport transfers, taxis, coaches and organised excursions can also become more expensive.
For families who prefer to explore their destination rather than remain at a hotel, these additional costs can make a significant difference.
A holiday which initially appears affordable may become much less attractive once the cost of getting around is included.
The pound and the cost of spending abroad
There is another important factor which British holidaymakers should watch: the value of sterling.
The exchange rate between the pound and the euro can have a considerable effect on the cost of a holiday.
If sterling weakens against the euro, British visitors effectively pay more for everything purchased in eurozone countries, even if local prices remain unchanged.
For example, a meal costing €100 will cost more in pounds if the exchange rate moves against sterling.
The same applies to hotel bills, drinks, excursions, shopping and car hire.
Currency movements are difficult to predict, but they could add to the pressure if the pound weakens at the same time as local prices increase.
This is particularly relevant because Britain imports considerable quantities of food, energy and other goods. A weaker pound can also contribute to inflation at home.
Travel insurance is another consideration
Travel insurance is an essential part of planning an overseas holiday, but it is another expense which could become more significant.
Insurers face rising medical treatment costs, emergency repatriation expenses and claims arising from cancelled or disrupted travel.
Medical treatment abroad can be particularly expensive, especially where private healthcare is involved.
For older travellers, insurance can already represent a substantial proportion of the overall holiday budget.
The European Health Insurance Card and its UK successor, the Global Health Insurance Card, provide access to necessary state healthcare in participating countries under their respective arrangements. However, neither replaces comprehensive travel insurance.
Travellers should also check whether their policy covers cancellation, missed departures, medical emergencies and disruption arising from circumstances affecting their destination.
Package holidays could become more expensive
Tour operators such as TUI and Jet2holidays face a difficult balancing act.
They have to negotiate prices with airlines, hotels, transfer companies and other suppliers, often many months before customers actually travel.
If all those businesses face higher costs, the tour operator must decide whether to absorb them or pass them on.
The travel trade is already warning that 2027 package holiday prices could rise substantially.
A report by travel industry publication TTG on 27 October highlighted the different fuel-hedging arrangements among airlines and the pressure this could put on package prices.
Jet2 and TUI have different levels of protection against higher fuel prices, which could influence their pricing decisions.
There is also an important distinction between a new booking and a holiday which has already been purchased.
Under UK package travel regulations, a tour operator can increase the price of an existing booking in certain circumstances if the contract permits it. These include specified increases in fuel costs, taxes and exchange rates.
However, the rules provide protection. Customers must be informed in writing at least 20 days before departure, and if the increase exceeds 8% of the package price, they must be offered the opportunity to terminate the contract without a cancellation fee.
Flight-only bookings are treated differently. Airlines cannot simply demand an additional fuel surcharge after a ticket has been purchased.
The Civil Aviation Authority provides guidance on these protections, and customers should check the terms and conditions before booking.
Even the cost of leaving Britain is increasing
There is another expense which deserves attention: Air Passenger Duty.
The UK already has relatively high departure taxes compared with many other countries.
Air Passenger Duty is scheduled to increase again from April 2027. For an economy passenger on a short-haul international flight, the standard rate will rise from £15 to £15.49.
The increase is relatively modest compared with the potential movement in fuel prices, but it adds to the overall cost of flying.
For longer journeys, the tax is considerably higher. The economy rate for the longest distance category is scheduled to increase from £106 to £109.46.
The travel industry has argued that further increases make British aviation less competitive and add to the financial burden on families.
What might a family holiday cost in 2027?
It is difficult to predict exactly how much holidays will increase because airline fares, hotel prices, exchange rates and food costs do not all move together.
However, consider a hypothetical family holiday currently costing £2,000.
Flights account for £500, accommodation £750, food and restaurants £400, transport £150 and excursions and other spending £200.
If flights increase by 15% to 20%, accommodation and food by 5% to 8%, local transport by 8% to 12%, and excursions by 5% to 8%, the overall cost could rise to approximately £2,150 to £2,300.
That is an increase of £150 to £300, or 7.5% to 15%.
This is an illustration of how several increases could combine, not a forecast that all these price rises will necessarily occur.
For a family paying £4,000 for a more expensive holiday, the equivalent percentage increase would mean another £300 to £600.
And that assumes the pound does not weaken significantly and there are no additional costs arising from disruption or changes to travel arrangements.
Could British tourism benefit?
There may be an unexpected consequence if overseas holidays become considerably more expensive.
Some British families could decide to remain at home and take their holidays in the UK instead.
Scotland could benefit from this, particularly areas offering scenery, walking, wildlife, historic attractions and coastal holidays.
Caithness and Sutherland have plenty to offer visitors, and an increase in domestic tourism could provide opportunities for accommodation providers, restaurants, attractions and local businesses.
However, it would be wrong to assume that domestic holidays are immune from inflation.
Hotels, guest houses, self-catering accommodation, restaurants and visitor attractions in Scotland face many of the same energy, food, staffing and transport costs as businesses elsewhere.
The cost of travelling around Scotland can also be significant, particularly where visitors need to hire a car.
There is therefore an opportunity, but businesses will need to provide competitive prices and good value if they want to attract people who might otherwise have travelled overseas.
Will booking early make a difference?
There is an understandable temptation to book a 2027 holiday early to avoid possible price increases.
There are advantages to doing so, particularly for families who need to travel during school holidays or want a particular hotel or destination.
However, booking early does not automatically guarantee the cheapest price. Airlines use sophisticated pricing systems, and fares can sometimes fall as well as rise depending on demand and available seats.
Customers should also compare the protection offered by different holiday companies.
Some operators have publicly committed not to impose additional fuel surcharges on existing bookings. Others have different contractual arrangements.
It is worth checking whether the advertised price is fixed, what happens if the airline changes the flight and what cancellation protection is available.
The important thing is not to allow warnings about future price increases to create pressure to buy an expensive holiday without comparing alternatives.
Is this the beginning of a longer period of expensive holidays?
Much depends on what happens to energy prices and the situation in the Middle East.
If oil and jet fuel prices fall substantially, some of the pressure on airlines and travel companies should ease. However, there may be a delay before lower costs feed through into holiday prices.
If prices remain elevated throughout 2027, the consequences could be more significant.
Airlines will face higher fuel bills, hotels will face higher energy costs, restaurants will have to contend with food inflation and transport companies will be paying more to operate their vehicles.
The cumulative effect could be a holiday industry which is considerably more expensive to use.
There is also a wider economic concern. Holidays are often one of the first discretionary expenses families reduce when household budgets become stretched.
That could leave travel companies facing the uncomfortable combination of higher costs and customers who are increasingly reluctant to pay higher prices.
For British families, the choice may increasingly become whether to spend more on an overseas holiday, take a shorter break, choose a cheaper destination or stay in Britain.
The aviation fuel crisis may have attracted the headlines, but the real story is much wider.
The cost of taking a holiday is influenced by almost every part of the economy. If energy, food, transport, accommodation and insurance all become more expensive at the same time, a 20% increase in air fares may turn out to be only one part of the financial challenge facing holidaymakers in 2027.