Low-cost British airline easyJet said the fall in oil prices could knock as much as £2 off its average fare this year.
The Luton-based airline estimates that the slump in oil prices by more than half since last summer will take between £90 million and £130 million off its annual fuel bill.
A spokesman added that this would be passed on to passengers, taking up to £2 off last year’s total revenue per passenger of £62.64.
It said: “easyJet expects that lower fuel costs will be beneficial for its customers as fares adjust.”
The budget airline also said that first-half seasonal losses would reduce this year as the group has added more seats to successful routes and attracted record business passengers in the first three months of the year to the end of December. Shares rose more than 3% today.
It said it boosted quarterly revenues by £34 million to £931 million after adding around 500,000 extra seats from airports where it has a strong presence such as London Gatwick, Geneva and Amsterdam.
The Luton-based airline said passenger numbers rose by 4.1% to 14.9 million during the quarter to December 31.
In November the carrier posted a full-year pre-tax profit up 21.5% to £581 million, its fourth year in a row of record pre-tax profits, as it said it was winning the battle for the skies with both national flag carrier and budget rivals.