easyJet, the British budget airline, today faced growing doubt over whether it will hit a target to increase profits by 20 per cent this year as the slowdown in consumer spending began to spread into the travel industry.

Shares in easyJet fell by 10.9 per cent to 476.5p as the company revealed that it failed to fill all of its plane seats during December when, after increasing its capacity by 13 per cent during the year, its passenger load fell by 2.2 per cent. It reported a 9.9 per cent increase in the number of passengers it carried in December compared to the same month in 2006.

Andrew Fitchie, an analyst at Collins Stewart, said because air travel has become cheaper, it is increasingly normal for people to take between two or three holidays a year as opposed to just the traditional summer break.

He said: “People view that holiday as a non-discretionary item and will still take that holiday though they may trade down.”

But Mr Fitchie said there were signs that cost-conscious consumers were cutting back on additional holidays while corporate travel, which makes up 20 per cent of easyJet’s business, will slow as economic pressures force companies to cut costs. “The indication is that the demand for people wanting to fly is starting to wane,” he said.

easyJet said in November it was targeting a 20 per cent increase in profits for the 12 months to December 31, 2008. In its last full financial year, pre-tax profits rose by 58 per cent to £201.9 million on revenues up 11 per cent to £1.79 billion.

However, easyJet is facing higher fuel costs, after oil prices last week reached $100 a barrel, as well as the prospect of waning passenger numbers. While easyJet does not pass on extra fuel costs to its customers by increasing ticket prices, like other airlines, it does generate additional revenue from ancillary charges from speedier boarding as well as extra turnover from excess baggage charges.

Though in the current climate, customers may prove unwilling to spend extra on easyJet’s ancillary services to save on travel costs.

easyJet was unavailable for comment.

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