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COST OF LIVING

Why the cost of flying from Germany will rise in May

Ticket tax on air travel will increase significantly from May this year, according to German government plans. Here's how it could affect you.

A United Airlines flight departs from Frankfurt.
A flight departs from Frankfurt. Photo: picture alliance/dpa | Jana Glose

What’s happening?

Anyone planning a holiday should book their flights as soon as possible. That’s because flying from Germany is likely to get more expensive in a few months’ time. 

The increase in the so-called Luftverkehrsabgabe or ‘aviation taxation and subsidies’ air traffic tax is part of the measures put together by the German government to plug the budget gap of billions of euros that opened up following a judgement on borrowing by the Constitutional Court. 

Despite pushback from the aviation industry, Finance Minister Christian Lindner (FDP) has now pushed through savings and tax increases planned by the coalition. At the weekend, he sent the Second Budget Financing Act to his cabinet colleagues who approved it on Monday. It shows that the higher Ticketsteuer or ticket tax will apply from May 2024 after it’s been signed off by German parliament. 

How will it affect air passengers?

The tax will mean that ticket prices will go up, making air travel from Germany more expensive. 

The Finance Ministry stipulates that the ticket tax will be raised to between €15.53 and €70.83.

It will rise on May 1st by almost a fifth depending on the final destination of the journey. This means that if a flight within Germany or to member states of the European Union cost €12.73 per passenger per journey in 2023, the tax will rise to €15.53 from May. For air travel of more than 6,000 kilometres, the tax will now be €70.83 per passenger instead of €58.06.

According to DPA, the cabinet approved the increases in the draft bill, which the coalition parties can now submit to the Bundestag.

Why is the government hiking up the tax?

It is a bitter pill to swallow as the cost of living for residents in Germany has been rising significantly in recent years. 

But the German government has been stuck in a budget crisis following a top court ruling involving the debt brake last year, that wreaked havoc on spending plans. 

This led to politicians hastily putting together savings plans.  

READ ALSO: How Germany plans to solve its budget crisis in 2024

Together with a further amendment to the Aviation Tax Act, the move is expected to lead to additional revenue of €445 million in the current year. Revenue is expected to rise to €580 million in the coming years, the government estimates.

The ticket tax affects all passengers taking off from German airports. Although the airlines have to pay the surcharges, the higher taxes are passed on to passengers.

The aviation industry, though against raising taxes, had previously assumed that a higher ticket tax would be introduced in the second quarter of the year.

“With the (ticket) tax, we are covering the flights of all airlines that fly from Germany,” Transport Minister Volker Wissing recently said, while defending the plan in an interview with Handelsblatt.

Germany had initially put forward a plan to introduce a fuel tax on domestic flights, but this proposal was taken off the table.

Raising ticket tax is competitively neutral for the domestic market, said Wissing. In contrast, the initially proposed paraffin tax would have favoured “fuel tourism” and “would also have made it more difficult for us to decarbonise air traffic because it can be easily circumvented”, the Minister added. 

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TRAVEL NEWS

What’s the environmental fee Lufthansa, Austrian and Swiss airlines will charge you?

German airline group Lufthansa, which includes national flyers Austrian and Swiss airlines have said it will add an environmental charge to passenger fares in Europe to cover the cost of increasing EU climate regulations.

What's the environmental fee Lufthansa, Austrian and Swiss airlines will charge you?

How much will the cost be?

The extra cost will be added to all flights sold and operated by the group departing from EU countries as well as Britain, Norway and Switzerland, the group said in a statement.

It will apply to flights from January next year and, depending on the route and fare, will vary from one to 72 euros.

What’s the justification for the cost?

“The airline group will not be able to bear the successively increasing additional costs resulting from regulatory requirements in the coming years on its own,” said Lufthansa.

The group — whose airlines include Lufthansa, Eurowings, Austrian, Swiss and Brussels Airlines — said it is facing extra costs from EU regulations related to sustainable aviation fuel (SAF).

The aviation sector is among the toughest to decarbonise and SAF — a biofuel that produces lower carbon emissions than traditional jet fuel  — is seen as a crucial ingredient to hitting emissions targets but is currently more expensive to produce.

In March, Airlines for Europe, which represents the continent’s largest airline groups including Lufthansa, complained that production of the fuel in Europe is minimal and lags far behind projects launched in the United States.

Lufthansa said it also faces extra costs from changes to the EU’s emissions trading system, and other regulatory measures.

The group aims to halve its net carbon emissions by 2030 compared to 2019, and to go carbon neutral by 2050.

What is the EU legislation?

The EU legislation requires airlines to gradually increase use of the fuel on routes departing EU airports.

Carriers will need to include two percent of SAF in their fuel mix from next year, rising to six percent in 2030 and then soaring to 70 percent from 2050.

What’s the sate of Lufthansa group’s finances?

After having to be bailed out by the German government during the coronavirus pandemic, Lufthansa racked up healthy profits in 2022 and 2023 as travel demand roared back.

But it was hard hit by a series of strikes at the start of this year, reporting a hefty first-quarter loss.

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