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Germany’s Lufthansa continues to recover amid travel boom

German airline Lufthansa said Wednesday it had reduced its net loss for the first quarter, as pent-up demand for travel is expected to further boost its bottom line in the upcoming summer months.

Published: 3 May 2023 13:51 CEST

Lufthansa

A Lufthansa plane. Photo by J Ph on Unsplash)

The group’s net loss for the first three months of the year reached €467 million, an improvement from a loss of €584 million a year ago.

The negative result was mainly down to normal seasonality, the airline said, although strikes at German airports as well as costs for the planned expansion of flights in the summer also weighed on its earnings.

Lufthansa recently massively thinned out its summer flight offering and cancelled 34,000 flights due to the still-glaring staff shortage.

The airline industry “continues to suffer from bottlenecks and staff shortages, especially in Europe”, a Lufthansa spokesperson told business publication WirtschaftsWoche. In addition to airlines, airports, ground handling services and air traffic control are particularly affected.

The cancellations should now reduce the workload and “allow for more stability for the whole system,” he added.

READ ALSO: Will Germany’s airports face travel chaos again this summer?

Increasing passenger numbers

Revenues rose by 40 percent to seven billion euros for the period, as 22 million passengers boarded Lufthansa group’s planes between January and March.

“The continuously strong demand gives us confidence for the coming months. The summer travel season will provide a major contribution to achieving our targets for 2023,” said Remco Steenbergen, Lufthansa’s chief financial officer.

Capacity had already grown to 75 percent of the pre-Covid level in 2019 and was up 30 percent from the previous year.

For the full year, Lufthansa expects capacity to reach between 85 and 90 percent compared to 2019.

READ ALSO: Germany’s Lufthansa to hire 20,000 employees as recovery gathers pace

Member comments

Anonymous - 4 May 2023 at 12:01 CEST

Living near Frankfurt means a Lufthansa monopoly and Lufthansa is taking advantage – at a recent travel industry conference Lufthansa was asked when they will reduce prices to more acceptable levels – the response was “When people stop paying those high prices” Frankfurt needs Ryanair back to moderate, but the airport colludes with their biggest customer

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Should travellers in Germany buy flights before ticket tax hike in May?

Air travel from Germany is getting more expensive.

That’s because, from May 1st, the Luftverkehrsabgabe or ‘aviation taxation and subsidies’ air traffic tax is being hiked by around 20 percent. The extra costs will likely be passed onto customers.

Here are the most important points.

What is the air traffic tax – and why is it being raised?

Since its introduction in 2011, the air traffic tax – also known as the ticket tax or air traffic levy – has generated high revenues for the state. Recent figures show that it brought the government almost €1.2 billion revenue in 2022 and €1.6 billion in 2023.

The move to raise the ticket tax from May is part of German government measures to save money following a ruling on spending by the Federal Constitutional Court last year. The government expects additional annual tax revenue of between €400 and €580 million in the coming years from raising the ticket tax.

READ ALSO: Five budget cuts set to impact people in Germany in 2024

How much is it going up?

All flight departures from a German airport are taxed. The tax currently costs between €13.03 and €56.43 per ticket depending on the destination. These costs are ultimately passed on to passengers.

From May 1st 2024, the tax rates will be between €15.53 and €70.83 per ticket – depending on the destination.

Here are the additional costs at a glance:

Up to 2,500 kilometres – for flights within Germany or to other EU countries, the tax rises to €15.53 per person and journey from €13.03
Up to 6,000 kilometres – on medium-haul flights, the ticket tax increases to €39.34 from €33.01
More than 6,000 kilometres – for longer flights over 6,000 kilometres, the tax rises to €70.83 from €59.43

Only flight tickets for children under the age of two – provided they have not been allocated their own seat – and flights for official, military or medical purposes are exempt from the tax.

READ ALSO: Everything that changes in Germany in May 2024

Does this mean I should buy a ticket to fly before May?

It could make sense to book a flight before May 1st if you are planning a trip or holiday abroad. Those who buy a flight before the tax is increased will pay the lower tax – even if the flight is later in the year.

There is still a question mark over whether the tax can be backdated on the pre-paid flight ticket. However, according to German business outlet Handelsblatt, it would be legally difficult for airlines to demand an increased tax retrospectively.

German travel outlet Reisereporter said this is one reason “why the airlines have not yet informed air travellers of the planned increase in ticket tax”.

What are airlines saying?

They aren’t happy about the hike, mostly because they already feel bogged down by fees and operating costs at German airports.

The airline association ‘Barig’ has warned that charges at airports and in airspace are already high. According to the Federal Association of the German Air Transport Industry, the departure of an Airbus A320 in Germany costs around €4,000 in government fees, while in Spain, France and Poland it is between €200 and €1,500. These costs are generally passed onto customers, making buying tickets from Germany more expensive than other places.

The effects of the increased ticket tax will be most noticeable for low-cost airlines offering budget flights.

A spokesperson from EasyJet recently told The Local that it was “disappointed with the increase of the passenger tax”, and that the “cost increase will result in higher fares for consumers and damage Germany’s connectivity”.

READ ALSO: ‘Germany lacks a sensible airline policy’: Is budget air travel on the decline?

Meanwhile, the aviation industry is concerned that air traffic in Germany is lagging behind other European countries and is recovering at a slower pace since the pandemic. According to the German Aviation Association BDL, around 136.2 million seats will be offered on flights in Germany from April to September 2024. This is six per cent more than in 2023, but only 87 per cent of the number of seats available before the pandemic (2019).b

In the rest of Europe supply is expected to rise above the pre-pandemic level.

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