Shares in easyJet, the British budget airline, plunged almost 14 per cent yesterday as the slowdown in consumer spending spread to the travel sector, casting doubt on the company’s ability to hit its target of 20 per cent profits growth this year.

EasyJet reported a 9.9 per cent increase in passenger numbers in December compared with the same month in 2006, but it failed to fill all its seats last month when, after increasing its capacity by 13 per cent during the year, passenger load fell by 2.2 per cent. Shares in easyJet slipped 74½p to 460p.

Andrew Fitchie, an analyst for Collins Stewart, said that because air travel had become cheaper, it was increasingly common for people to take two or three holidays a year rather than just the traditional summer break. “People view that as a nondiscretionary item and will still take that holiday, though they may trade down,” he said.

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 that it was targeting a 20 per cent increase in profits for the 12 months to December 31. In the past full financial year, pretax 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 as oil hovers at just under $100 a barrel, as well as the prospect of declining passenger numbers. While the airline does not pass on fuel costs to its customers through surcharges, it does generate revenue from priority boarding and baggage charges. Customers might be unwilling to pay these in the present economic climate.

EasyJet was unavailable for comment last night.

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